JPMorgan Releases Investing Playbook for 2026 Midterm Elections
JPMorgan strategists outlined market scenarios for the 2026 midterms, suggesting that outcome-specific stock picking will be more effective than broad sector trends.
Strategists at JPMorgan Chase & Co. released an investing playbook for the 2026 U.S. midterm elections, identifying three primary scenarios based on congressional control. Strategist Dubravko Lakos-Bujas noted that the equity impact of these midterms will be more nuanced than the 2024 presidential race, favoring individual stock picking over broad sector trends.
A Red Wall scenario, where Republicans maintain control, is viewed as the most supportive for AI infrastructure and data center buildouts due to expected deregulation and fiscal expansion. Conversely, a Blue Wave, where Democrats take both chambers, is seen as bullish for healthcare and clean energy, with the potential to reverse Medicaid cuts from the One Big Beautiful Bill Act. Historical gridlock is noted to correlate with positive S&P 500 returns, particularly benefiting the defense and healthcare sectors.
Historical data from the Carson Group and Fidelity Investments indicates that October and November are typically strong months during midterm years, with the S&P 500 averaging a 14.5% gain in the following calendar year. However, JPMorgan analysts cautioned that while the fourth quarter is usually strong, the lead-up often struggles. With the Vanguard S&P 500 ETF already up approximately 13% through the first three quarters of 2026, some analysts suggest that AI growth or post-election optimism may already be priced into the market.
