JPMorgan Analyzes Midterm Elections: 66% Probability of Democratic Sweep of Both Chambers, Republican Hold on Both Chambers Most Favorable for US Stocks

BlockBeats news, November 3 — JPMorgan conducted a scenario analysis of four possible congressional power configurations following the U.S. midterm elections. Among them, the probability of Democrats winning control of both the Senate and House is the highest at 66%; the probability of Republicans holding both chambers is only 7%, but it corresponds to the largest expected gain for the S&P 500 among the four scenarios.

Democrats control both chambers (66% probability): The S&P 500 could fall 0.25% or rise 0.5%. Market concerns over stricter AI regulation and restrictions on data center construction could trigger a selloff in AI-related stocks. However, JPMorgan believes that even if a bill restricting AI industry development passes Congress, it would be difficult to secure enough votes to override Trump's presidential veto, so traders are advised to consider buying on tech stock pullbacks. Deficit spending may decrease, long-term Treasury yields face downward pressure, and some corporate executives linked to Trump political donations may face greater risk of congressional investigations.

Democrats control the House, Republicans control the Senate (26% probability): The S&P 500 is expected to rise 0.5% to 1%. The market may welcome the legislative gridlock brought by divided power, as neither party can single-handedly push major policies or expand government spending. Long-term Treasury yields may decline, but some companies and their leaders may still face congressional investigations.

Republicans hold both chambers (7% probability): The S&P 500 is expected to rise 1% to 1.25%. The market would not immediately face new congressional regulatory risks, and additional policy pressure on tech companies would be relatively limited. However, deficit spending may increase further, pushing long-term Treasury yields higher; Trump may continue military action against Iran, which is also a potential risk under this scenario.

Republicans control the House, Democrats control the Senate (1% probability): The S&P 500 is expected to rise 0.25% to 0.75%. Divided congressional control may trigger more intense budget battles and even lead to a federal government shutdown. With Democrats controlling the Senate, congressional investigations can still proceed, and investigation risks for relevant companies and individuals will not disappear.