The Market Loves Gridlock: What Tuesday's Vote Means for Your Money

Nov 4, 2026 · PTM Wealth Management Market Bulletin

Voters sent Washington a message on Tuesday. Democrats won both the House and the Senate, ending one-party rule and setting up two years of divided government. After an overnight dip, the Dow and S&P 500 rallying strongly in the early part of Wednesday, at the time of this writing.

Voters Were Fed Up With Costs

• 84% of early voters named the economy their top concern (Pew Research Center).
• Gas prices rose 9.1% in September alone after U.S.-Israeli strikes on Iran disrupted oil shipping.
• Food, medicine and health care costs kept climbing.
• 69% said the Iran war wasn't worth fighting (AP-NORC poll), and 74% said tariffs raised consumer prices.

Why Markets Like Gridlock

• Fewer surprises. Sweeping changes are harder to pass, and markets hate uncertainty more than any single policy.
• A check on extremes. Compromise waters down policy shocks from either side.
• Strong post-midterm history. The S&P 500 has averaged a 12.4% return in the six months after a midterm, positive in all 13 cycles studied.

One caution: returns with a Republican president and an opposition Congress have historically lagged other gridlock combinations, and tech stocks sold off overnight on regulation fears.

What It Means for You

Of course, divided government doesn't eliminate economic risks, and presidents retain considerable authority over trade and foreign policy. But gridlock makes major tax legislation, in either direction, harder to pass for the next two years. But it doesn't fix the deficit, and we believe higher tax rates are coming. That makes today a window for Roth conversions: pay tax now, at rates you know, rather than later, at rates you don't. 

Elections matter, but corporate earnings, inflation, interest rates, and economic growth ultimately matter more to long-term investment performance. If we can answer any questions about how gridlock may affect your investment strategy, please reach out to us.

For informational purposes only; not investment, tax or legal advice. Past performance does not guarantee future results.