Wall Street is weighing how different outcomes of the November 2026 US midterm elections could affect equities, bond yields, government spending, and regulatory risks. According to JPMorgan's Market Intelligence Note, a Democratic sweep of Congress is the most likely scenario, with a 66% probability based on Bloomberg prediction market data as of Nov. 1, 2026.
Blue Wave Has 66% Probability
A Blue Wave, in which Democrats control both the House of Representatives and the Senate, carries a 66% probability. JPMorgan expects the S&P 500 to decline by a maximum of 0.25% or rise up to 0.5%.
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The brokerage also highlighted concerns about potential AI regulation but argues that Trump is unlikely to sign legislation restricting the technology, while Democrats would lack a veto-proof majority. Thus, if there's any correction in AI stocks, then investors can see a buying opportunity in this space; however, some de-risking within the sector remains possible.
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There is a 26% probability of a split Congress, where Democrats will be controlling the House and Republicans retaining the Senate. As per JPMorgan, this outcome can be positive for the market, and the index can rise anywhere between 0.50% and 1%, potentially alongside lower long-end bond yields as deficit spending comes under pressure.
Red Wave Could Lift Stocks 1.25%
A Republican sweep of both chambers, or a Red Wave, has only a 7% probability; however, since there will be no regulatory risk in this scenario, the brokerage expects the S&P 500 to gain between 1% and 1.25%. However, expectations of continued elevated deficit spending could push long-end yields higher.
The last scenario, in which Republicans control the House and Democrats the Senate, has only a 1% probability, and in this case, the S&P 500 could gain between 0.25% and 0.75%.
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