The midterm elections kicked off in the U.S. today, with the final polls set to close after midnight. Ahead of the final results, many expect the Democrats to win a majority in both the House and Senate. According to polling expert Nate Silver, the Democrats have an 82.4% chance of winning the Senate and a 96.4% chance of winning the House.
That could bode well for the S&P 500 (SPX). Since 1946, Democrats have won the Senate and House seven times under a Republican president. When this occurs, the benchmark index has returned an average of 11% three months later.
JPMorgan Outlines S&P 500 Election Scenarios
The average one-year return is even better at 16%, while the return once the incumbent president’s term ends is 22%. If Democrats win the House while Republicans retain the Senate, the S&P 500’s average returns are 2% over three months, 16% over one year, and 31% by the end of the president’s term.
JPMorgan estimates that a Democratic sweep has a 66% chance of occurring and expects the S&P 500 to move between -0.25% and 0.5% in the immediate aftermath. The firm assigns 26% odds to Democrats winning the House and Republicans retaining the Senate. In this scenario, JPMorgan expects a gain between 0.5% and 1%.