Why One Fool Columnist Expects Stocks to Soar After the 2026 Midterm Elections

On Nov. 3, voters across the United States will cast ballots in races for the U.S. House and the U.S. Senate, and a Motley Fool columnist has already staked out a prediction: stocks will soar in the months that follow. It is an opinion piece, not a report, and the author is candid that nobody actually knows what will happen.

The backdrop is a tense one. Politics is as partisan as ever, and the Iran war hangs over the country. Investors, the columnist writes, will be reading the results for clues about what policy looks like over the next two years. The author also admits to real reservations about the market itself: the enthusiasm around artificial intelligence, a bull market that is about to finish its fourth year, and valuations that have been elevated for some time.

Still, the argument rests on history. The columnist points to JPMorgan Chase research showing that since 1950, the S&P 500 has been positive over the 12 months after every midterm election, with an average gain of roughly 15%. The logic is straightforward. The run-up to a midterm is full of uncertainty because a shake-up in Congress could change policy and hit particular sectors, or the whole market. Once the votes are counted, whether or not investors like the outcome, they have more certainty to plan around.

JPMorgan Global Market Strategist Jordan Jackson put it this way in a research note on Oct. 7: history favors investors after midterms, and an environment of solid earnings, steady growth, strong investment and a less aggressive Fed than feared supports the case that this cycle can follow the pattern. His advice was not to trade around the election, but to stay invested, remain diversified and focus on longer-term drivers of returns.

The columnist is careful not to oversell the pattern. Since 2000, the S&P 500 has been positive in the year after every midterm, but it has rarely reached that 15% average. It came close in 2002 and 2022 and topped 10% in 2018. In 2006, 2010 and 2014, the gains were between roughly 4% and 7%. As of this writing, the index stood at 7,623.68, down 0.52% on the day, within a 52-week range of 6,316.91 to 7,844.52.

The political forecast is lopsided. According to prediction market Kalshi, Democrats have better than a 91% chance of retaking the House and a 67% chance of winning back the Senate. The columnist sees both upside and downside for stocks in that outcome. A Democratic Congress would likely make it harder for President Donald Trump to continue the Iran war, and a quicker end could more fully reopen the Strait of Hormuz and, over time, bring down gas prices and inflation. On the other side, Democrats are likely to be more opposed to the data centers AI depends on, which could eventually pressure the AI stocks that have powered the market for several years.

The columnist's bullishness ultimately leans on gridlock, which Wall Street tends to favor because it makes sweeping legislation harder to pass. Even with both chambers, Democrats would face Trump's veto power, and overriding it takes a two-thirds majority in the House and Senate. Getting past a Senate filibuster would also require them to outperform dramatically. Meanwhile, corporate earnings keep growing at a strong pace, and the author concludes that timing a reset or crash is nearly impossible.

What to watch after Nov. 3 is whether a Democratic House, and possibly Senate, actually shifts the course of the Iran war, gas prices and AI data center policy, and whether the market's post-midterm record holds, even if the gain falls short of the 15% average.