November 2026 KWP Newsletter
Post Election: What History tells investors
Every two years, Washington gets a little political makeover, headlines get louder, and investors are left wondering what it all means for their portfolios. But history offers an interesting perspective: while election season can bring plenty of uncertainty, markets have often found a way to look beyond the political noise. In fact, since World War II, the S&P 500 has averaged a positive gain 100% of the time in the 12 months following midterm elections. Perhaps the lesson is that markets don't necessarily need certainty to move higher; sometimes they simply need the uncertainty to pass. With the 2026 midterms behind us, the U.S. has a new set of political and economic developments to consider as we head toward year-end.
A New Political Landscape
November 3 midterm elections resulted in Democrats gaining control of both the House and Senate, creating a divided government for the remainder of President Trump's term. The change in congressional leadership could influence future discussions surrounding taxes, government spending, regulation, and business policy. While political developments can create short-term market volatility, history suggests that investors should be cautious about making investment decisions based solely on election outcomes. Ultimately, corporate earnings, economic growth, inflation, and interest rates tend to have a much greater influence on long-term market performance.
Source: https://www.bbc.com/news/articles/cm4g1j0n92qdo
Inflation and Interest Rates Remain in Focus
Inflation remains one of the biggest variables facing investors and the Federal Reserve. October's Consumer Price Index (CPI) increased 0.4%, following September's 0.6% increase and exceeding economists' expectations of 0.3%. Core CPI, which excludes food and energy, rose another 0.3%, marking its third consecutive month at that pace. Unfortunately, the October year-over-year inflation comparison was unavailable because the prior year's government shutdown prevented the collection of October 2025 data.
The Federal Reserve held its benchmark interest rate steady at 3.75%–4.00% during its October meeting, but the latest inflation numbers have complicated the outlook. Fed Governor Christopher Waller has indicated support for a December rate increase, with the possibility of a larger move if inflation worsens. Markets are now pricing in additional rate increases, creating another challenge for consumers, businesses, and investors. Higher borrowing costs can slow economic activity and place pressure on stock and bond valuations.
Sources: Read full story
Markets: Technology and AI Take Center Stage
Technology stocks have experienced a post-election pullback as investors reconsider the enormous spending commitments associated with artificial intelligence. Concerns are growing that the cost of building AI infrastructure may be running ahead of the near-term financial benefits. Following a decline in semiconductor and technology shares, analysts are questioning whether future earnings will justify current valuations.
Despite the recent volatility, the broader market continues to benefit from developments across multiple industries. As we move toward year-end, corporate earnings, employment trends, inflation, and the Federal Reserve's next move will remain important indicators of market direction.
Source: https://www.nbcnews.com/business/markets/tech-stocks-plunge-ai-midterms-rcna607650
Looking Ahead
Between the election results, persistent inflation, shifting interest rate expectations, and questions surrounding AI investment, there is certainly no shortage of headlines. However, history offers an important perspective: uncertainty is a normal part of investing, not necessarily a signal to step away from the market. As the accompanying chart illustrates, stocks have historically delivered strong returns in the 12 months following midterm elections.
Rather than trying to predict every political or economic development, maintaining a disciplined investment strategy, appropriate diversification, and a focus on long-term financial goals remains a sensible approach. The headlines may change, but the importance of staying committed to a well-constructed investment plan does not.
*Results may vary based on date of reporting and historical dividend reinvestment. Returns represent the 12 months following midterm elections since World War II. Historical performance does not guarantee future results
https://qz.com/stock-market-after-midterm-elections-since-1950#stocks-after-midterms-10-findings-on-the-sp-500s-record-since-1950
Kotys Wealth Professionals
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