126 days until the midterm elections, according to Polymarket data:

Democrats have an 83% probability of winning the House, while Republicans have a 58% probability of retaining the Senate.
As it stands, there is a high likelihood that the two parties will continue to "each control one chamber." In such a scenario, both sides will need to compromise and negotiate on policies, making large-scale tax increases or cuts, massive fiscal stimulus, or extreme environmental/healthcare reforms difficult to directly implement—leading to a more predictable policy path. A divided Congress = moderate policies + reduced uncertainty.
Historical data shows that from the midterm elections through year-end and into the following year, U.S. stocks generally perform relatively well. A divided government (Congress and president from different parties, or split chambers) often reduces the likelihood of radical policies, which the market views as positive for risk assets.
The House holds priority in proposing fiscal bills such as taxes and budgets, and is responsible for initiating impeachment proceedings against federal officials (including the president), making it the chamber with more prominent power in fiscal and oversight matters.
Looking back at 2018, on the day the midterm election results were announced—Democrats winning the House and Republicans retaining the Senate—U.S. stocks rebounded sharply. The tech sector and healthcare sector each rose about 2.9%, leading the gains; consumer discretionary also jumped over 3%.
Sectors worth focusing on:
1️⃣ Healthcare, Insurance, and Biotech
Historically, the healthcare sector has outperformed the broader market more often following midterm elections.
While Democratic control of the House will still pressure healthcare expansion and public health budgets, Republican control of the Senate makes radical proposals difficult to pass, creating a neutral-to-positive structure with "growth and protection," which is relatively favorable for valuations of insurance companies, healthcare service providers, and innovative drug developers.
2️⃣ Consumer Discretionary and Some Internet Platforms
The end of the midterm elections itself reduces political uncertainty and volatility in tax policy expectations. Combined with a macro environment that does not enter a severe recession, consumption and broad-based internet platforms typically perform well in Q4 and the following year.
However, regulatory risks will not disappear, making it suitable to select high FCF, high-moat leaders rather than betting on the entire sector beta.