There's a 99% Chance That Democrats Retake the House, and History Says This Shift Will Have a Huge Impact on Stocks
Nearly a century of S&P 500 return data shows that a worst-case scenario is likely to unfold -- but this isn’t the complete story.
As Americans cast their votes throughout the day, prediction markets indicate a near-99% chance that Democrats will regain control of the House of Representatives in the upcoming election. Regardless of the Senate outcome, President Trump will assume office with a divided Congress, similar to his first term. Historical data suggests that a split Congress can significantly impact stock market returns for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite.
While a Democratic sweep may complicate President Trump's fiscal agenda and debt-ceiling negotiations, it would also protect personal and corporate income tax laws from major changes. The six months following midterm elections have historically been beneficial to investors, with the S&P 500 showing no decline over the subsequent six or 12 months during the past 75 years.
Investors can remain optimistic about the long-term outlook for major stock indices despite potential short-term challenges.
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