{"id":13638,"date":"2026-11-12T15:43:01","date_gmt":"2026-11-12T10:13:01","guid":{"rendered":"https:\/\/jarvisinvest.com\/jarvis-library\/?p=13638"},"modified":"2026-11-12T15:43:11","modified_gmt":"2026-11-12T10:13:11","slug":"midterm-elections-and-us-stocks-what-history-says-what-just-happened-and-what-to-do-about-it-now","status":"publish","type":"post","link":"https:\/\/jarvisinvest.com\/jarvis-library\/midterm-elections-and-us-stocks-what-history-says-what-just-happened-and-what-to-do-about-it-now\/","title":{"rendered":"Midterm Elections and US Stocks – What History Says, What Just Happened, and What to Do About It Now"},"content":{"rendered":"\n

The US midterms in 2026 <\/a><\/strong>went from relief to a landslide in three days. On November 3, Democrats took control of both chambers of Congress. The electoral anxiety that had plagued markets vanished on Wednesday, November 4, as the Dow surged 1,569 points, or 3%.\u00a0<\/p>\n\n\n\n

The S&P 500 had its worst day since the tariff shock in April 2025 on Thursday, November 5, when it dropped 4.36%. The Nasdaq Composite finished in a correction zone after falling 5.52%. The S&P 500’s eleven sectors all closed down.<\/p>\n\n\n\n

The question is clear if you own US equities<\/a><\/strong>, either directly or through funds: history indicates that stocks often climb following elections, so what’s happening? Let\u2019s go through every point of what happened, what the long-term record actually says, and why both things can be true at once.<\/p>\n\n\n\n

What happened between November 3 and November 5<\/strong><\/h2>\n\n\n\n

The election:<\/strong> Both the House and the Senate were won by Democrats. According to CNN’s forecasts, they would have more than 250 House seats and 54 Senate seats, their biggest House majority in over 20 years. Nine out of ten voters cited the cost of living as a significant influence in their decision to vote, while exit polls revealed that President Trump’s support was at a record low 38%. January marks the start of the new Congress.<\/p>\n\n\n\n

November 4, Wednesday: <\/strong>Relief At 53,356, the Dow gained 1,569 points. The Nasdaq increased 1.4% and the S&P 500 increased 1.6% to 7,688.62. The most straightforward interpretation was relief: one source of uncertainty was eliminated now that the outcome was known.<\/p>\n\n\n\n

Thursday, November 5 Reversal: <\/strong>Wednesday’s gain was more than erased as the S&P 500 dropped to 7,353.73. At 51,523, the Dow dropped 1,833 points, or 3.44%. About 12% less than its record close on October 6, the Nasdaq ended the day at 24,315.<\/p>\n\n\n\n

Stocks related to chips and AI infrastructure saw the biggest drop. In a single session, Nvidia sank almost 9%, the Philadelphia Semiconductor Index fell more than 12%, and some data center operators lost more than 14%. The Nikkei in Japan and the Kospi in Korea, both of which have increased by more than 20% this year, were identified by analysts as likely to face pressure when Asian trade began on Friday.<\/p>\n\n\n\n

Why the market turned: one explanation, not the only one<\/strong><\/h2>\n\n\n\n

The most widely cited explanation links the selloff to the election itself, though not to who won. A market analyst at eToro argued that rising electricity prices turned the rapid construction of power-hungry data centers into a campaign issue. <\/p>\n\n\n\n

Some Democrats have called for restrictions or pauses on new projects. The market’s reading, in his words, is that the AI buildout becomes slower and more expensive, which rewrites growth expectations across the whole supply chain.<\/p>\n\n\n\n

That is an interpretation, and it should be treated as one. A portfolio manager quoted by Reuters called the move a capitulation phase for data-center beneficiaries but said the size of the declines looked outsized. Nobody can say yet whether November 5 was the low point or the start of something longer. Anyone who claims to know is guessing.<\/p>\n\n\n\n

What the long-term record says<\/strong><\/h2>\n\n\n\n

Analyst Stan Wong’s study of Bloomberg data, published by BNN Bloomberg on October 29, looked at every US midterm election since 1950. The S&P 500 was higher 12 months after all 19 of them, with an average price gain of 15.1%, excluding dividends. That is the “19 for 19” record.<\/p>\n\n\n\n

The pattern is not universal. Canada’s TSX was higher after 14 of those 19 elections, averaging 11.6%. Differences in sector mix and commodity exposure mean the same political event does not lift every market equally.<\/p>\n\n\n\n

Wong’s sector data, which starts in 1990 and covers nine midterm cycles, adds a detail that matters right now:<\/p>\n\n\n\n