Why markets care about the election
“Vote Here” signage outside a polling location at Westchester Regional Library during a primary election in Miami, Florida, US, on Tuesday, Aug. 18, 2026.
Eva Marie Uzcategui | Bloomberg | Getty Images
Markets are starting to care about the 2026 midterm elections, which loom 10 weeks away and could rip full control of Congress from President Donald Trump and the Republican Party.
Democrats are favored to win at least one chamber of Congress come November, leading the generic ballot by roughly 6 percentage points according to FiftyPlusOne, a website that tracks poll results. A divided Washington would likely block lawmakers from passing any major non-bipartisan measures while turning the legislative branch’s most basic tasks into a drawn-out negotiation.
Analysts detailed to CNBC how a full or partial shift in power from Republicans to Democrats in Congress could affect the country’s capital markets. Potential outcomes include a lengthy standoff over raising the debt ceiling, more whipsawing executive actions and potential volatility if there’s a protracted wait for election results.
A more volatile executive
U.S. President Donald Trump waves the green flag to start the race with first lady Melania Trump and Donald Trump Jr. at the NTT INDYCAR Series on August 23, 2026 in Washington, DC.
Doug Mills | Getty Images News | Getty Images
While divided government tends to temper federal government actions, that’s not always the case with President Donald Trump in the White House for the two years of the next Congress.
“One of the things you often hear is the market loves a divided government, and that usually means the extreme positions don’t get enacted,” said Ed Mills, managing director of Washington policy at Raymond James. “But what we have been cautioning is the biggest market moves from a policy perspective of the last two years have come from executive action.”
“After the midterms, if Democrats have a majority at least in the House, do you think that President Trump is going to work with Democrats more? Or is it more likely he’s going to get more aggressive on executive action? My bet’s on more executive action,” Mills said.
The most prominent of Trump’s market-moving executive actions is his tariff campaign, which drew on untested emergency authority to impose sweeping levies on a swath of countries. Although the tariffs imposed under the International Emergency Economic Powers Act were eventually ruled unconstitutional by the Supreme Court, they remained on the books for over a year and weighed heavily on markets. And Trump has been replacing the tariffs that were rebuffed with new ones using different executive authority.
The debt ceiling
House Democratic Leader Hakeem Jeffries, of New York, at center, speaks as Senate Democratic Leader Chuck Schumer, of New York, listens during an event with congressional Democrats on the U.S. Senate steps, in Washington, May 21, 2026.
Win McNamee | Getty Images
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