The midterm election could change the balance of power for major U.S. companies whose revenues and regulatory outlook depend on Washington. Winning either congressional chamber would give Democrats greater influence over spending, investigations and legislation. President Donald Trump, however, would retain his veto power and substantial authority over tariffs, immigration and federal regulation.
Historical market performance offers one reference point. A Morgan Stanley analysis published Thursday found that, under Republican presidents, the S&P 500 averaged a 23% gain in the year following midterms when Congress was split, versus 16% when Democrats held both chambers. Congressional gridlock is often cited as one explanation, but Morgan Stanley’s head of U.S. public policy research, Ariana Salvatore, cautioned against expecting that pattern to repeat.
Democratic control would bring committee leadership and subpoena authority, increasing lawmakers’ ability to obtain corporate records and question executives. Existing inquiries offer a preview. Sen. Richard Blumenthal requested records on Oct. 21 from donors to Trump’s White House ballroom, including Cisco, Salesforce, ServiceNow and Kraken. Rep. Jamie Raskin has separately sought material related to tariff exclusions. Donations alone do not establish wrongdoing or preferential treatment, but investigations can expose internal communications and produce headlines that unsettle investors.
Healthcare companies face a particularly consequential spending debate. Trump’s 2025 tax and spending law is projected to cut federal Medicaid spending by $911 billion through 2034, according to KFF’s analysis of Congressional Budget Office estimates. New enrollment work requirements are scheduled to begin Jan. 1, or sooner in some states. Molina Healthcare received $32.2 billion, representing 75% of its 2025 premium revenue, from Medicaid, underscoring the program’s importance to insurers.
A Democratic chamber could seek changes to funding or delays in cuts through essential budget negotiations, although it could not independently repeal the law. Hospitals also face pressure from potentially higher uncompensated care and lower reimbursement rates. Congress established a five-year, $50 billion rural health fund, but KFF and medical providers say it will not fully compensate for broader Medicaid reductions. Democrats could simultaneously pursue tougher scrutiny of healthcare prices, coverage and profits.
Defense companies face decisions about which programs receive congressional support. The White House requested $1.5 trillion for national defense in fiscal 2027 and separately sought $87.6 billion in supplemental fiscal 2026 funding, primarily for military operations involving Iran. Democrats could challenge some spending connected to Iran and Israel while advocating additional Ukraine aid. Analysts see bipartisan backing for other priorities, including missile defense. Lockheed Martin’s framework agreement covering 850 F-35 aircraft over a decade still requires congressional authorization and funding.
Cryptocurrency businesses are seeking legislation that would make Trump’s regulatory changes more lasting. The Senate’s failure to advance the Clarity Act in September sent Coinbase and Circle shares down as much as 11%. Democratic gains could increase demands for consumer safeguards, restrictions on yield-bearing stablecoins and scrutiny of Trump’s crypto ventures. Banks also have a stake in congressional control, which influences regulatory oversight and future Federal Reserve appointments.
Artificial intelligence infrastructure presents another potential flashpoint. Morgan Stanley expects Microsoft, Amazon, Alphabet and Meta, among other hyperscalers, to spend over $1 trillion on capital projects in 2027. Yet CNBC’s October survey found 63% of registered voters opposed a data center within 10 miles of home. A House-backed measure addressing electricity infrastructure costs stalled in the Senate after Democrats sought stronger protections. Democratic gains could shift more grid costs to developers, while state regulators, utilities and local governments would continue shaping which projects proceed.
