The US midterms matter to markets because Congress shapes spending, taxes and trade law for the last two years of President Trump’s term. With Election Day on November 3, here is what fund managers and brokers are telling clients about US midterms markets, what history shows, and why UK and European readers are paying attention too.
Key facts (as of October 2026)
- Since 1950, the S&P 500 has averaged a 15.4% return in the year after a midterm, according to Capital Group.
- Capital Group found share prices swing more in midterm years, with volatility highest in the months before Election Day.
- Decision Desk HQ’s model gives Democrats a 79% chance of winning the House and 57% for the Senate (October 26).
US midterms: Tuesday, November 3, 2026
This article is general information about published market research. It is not financial advice.
Why do US midterms move markets?
Mainly through uncertainty. Before a vote, investors cannot know which laws will pass over the next two years, so prices tend to swing more. Since 1970, Capital Group says, the typical spread of returns in midterm years has been close to 16%, against about 13% in other years. That pattern has usually eased once the result is in.
Deutsche Bank's Jim Reid has suggested markets are "already feeling the gravitational pull of the midterms," interactive investor reported on October 21. The same article noted that the S&P 500 had moved mostly sideways since early August, although many other forces also drive prices, from interest rates to earnings.
What does history say about markets after a midterm?
The long-run record after the vote has been positive, while the midterm year itself has often been weaker. Here are the figures our sources cite.
| Research | Period | What it found |
|---|---|---|
| Capital Group | 1930–2022 | S&P 500 averaged 4.7% in midterm years, versus 9.5% in other years |
| Capital Group | Since 1950 | Average 15.4% in the 12 months after a midterm |
| Fidelity (via CMC Markets) | Since 1950 | Gains in the following 12 months 95% of the time |
| BlackRock (via CMC Markets) | Since 1970 | Average 14.1% over the next six months; 10.4% in cases where the White House party lost Congress |
Past performance does not predict future returns. Also, these studies measure US shares in dollars, so a UK or European investor's result also depends on the exchange rate. Capital Group itself advises against trying to time the market around elections.
How could each US midterms result affect markets?
Analysts describe three broad outcomes. Below is a neutral summary of what they have written about each, without any view on which is better.
- Split Congress. In the view of CMC Markets, a divided Congress could block big policy changes, though it might also bring budget standoffs. interactive investor pointed out that shares did well in earlier periods of divided government, such as the Reagan years.
- Democrats win both chambers. interactive investor suggested Democrats could slow federal spending cuts, which might affect healthcare and consumer companies. CMC Markets added that "a Democratic victory would not automatically unwind existing tariffs."
- Republicans keep both chambers. interactive investor said current priorities, such as data-centre construction, would likely continue at pace. CMC Markets noted that unified control can speed up legislation, which also means bigger policy shifts for markets to absorb.
Capital Group adds a wider point: since 1933, US shares have averaged double-digit returns under unified government, a split Congress and an opposition Congress alike. The forecast numbers in the tracker above are probabilities from a model, not results; our midterm election forecast explains them.
Why do UK and European investors watch US midterms and markets?
Because many hold US assets, and the dollar sits in the middle of the trade. CMC Markets lists the euro-dollar rate among the markets that may react to US trade policy, interest-rate expectations and shifts in risk appetite. So even an unchanged US share price can mean a different return in pounds or euros.
Still, the US vote is only one driver. Capital Group noted that in 2025 the MSCI Europe index returned over 35%, roughly double the S&P 500's gain. In the UK, interactive investor highlighted defensive FTSE 100 sectors and noted that both US Treasuries and UK gilts had rallied during a recent tech sell-off. For the policy stakes on Ukraine, NATO and trade, see why the midterms matter for Europe.
Could a slow US midterms count unsettle markets?
It could stretch the waiting period. Capital Group's data show volatility tends to peak before the result is known, and some states take days to finish counting, as our explainer on when results will be known sets out. Therefore markets may not have a clear answer on control of Congress by Wednesday morning in Europe.
How to watch election night live
In the UK, the first US polls close at 23:00 GMT on November 3, and the key Senate states report after midnight. Our guide to watching the US midterms from the UK and Europe lists the channels. For markets coverage, try the CNBC live stream; for the count itself, see how to watch the midterm results live or the C-SPAN live stream.
Coming soon: the NewsLive streaming app. We're building one subscription for live international news on Android, Roku, Fire TV and desktop. The service is under development — follow NewsLive for launch updates.
Frequently asked questions
Do markets usually rise after US midterms?
Historically, US shares have more often risen than fallen in the year after a midterm, according to Capital Group and Fidelity figures. That record does not guarantee anything for 2026.
Which party is better for the stock market?
Capital Group found double-digit average returns under every mix of control since 1933. It says long-term returns depend mainly on company earnings and valuations, not on which party wins.
When will markets know the result?
Many races will be called overnight, which is early morning in Europe on November 4. Close seats could take longer. Follow our daily updates in the Elections section.
