For Immediate Release
Chicago, IL – November 5, 2026 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Roundhill Generative AI & Technology ETF CHAT, Invesco Aerospace & Defense ETF PPA, State Street Health Care Select Sector SPDR ETF XLV, State Street SPDR S&P Bank ETF KBE and First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN.
Here are highlights from Monday’s Analyst Blog:
How Could the 2026 Midterm Elections Impact Wall Street ETFs?
Democrats have won the US House and Senate in the U.S. Midterm election.The outcome of the 2026 U.S. midterm elections could add another layer of uncertainty for Wall Street with Democrats gaining control of Congress.
Although markets generally welcome the period following midterm elections, a Democratic sweep could create near-term challenges for some sectors, particularly technology, defense and financials, per a CNBC article.
The bigger question is whether the market will follow its usual post-midterm rally pattern this time. The S&P 500 has already added about 10.4% in 2026, raising concerns that investors may have become too optimistic ahead of the election.
A Blue Wave Could Trigger Short-Term Market Volatility
JPMorgan estimates that a Democratic sweep could pull the S&P 500 down about 0.5% on Wednesday. Democrats winning both the House and the Senate could be favorable for stocks. A Yahoo Finance article indicated that this scenario has occurred seven times since 1946, according to Polymarket data. In those instances, the market gained 11% three months later, while it advanced about 16% one year later.
Will the Market Break Its Typical Post-Midterm Pattern?
Historically, the months following midterm elections have been favorable for U.S. equities. However, 2026 presents an unusual starting point.
Jonathan Krinsky, chief market technician at BTIG, noted that the S&P 500 has typically experienced a roughly 14% drawdown during the second half of midterm election years, per the same CNBC article.
This time, the opposite has happened. Krinsky believes the strong pre-election performance could leave stocks vulnerable to a reversal.
AI Stocks Could Face Another Round of Selling
Technology stocks, particularly those linked to artificial intelligence (AI) and data center infrastructure, could face additional pressure following a Democratic victory. Roundhill Generative AI & Technology ETF, which has lost about 22.2% over the past month.
A stronger Democratic presence in state governments could bring greater scrutiny of data center construction, energy consumption and tax incentives for AI infrastructure. This could weigh on companies involved in data center development and technology-related capital spending.
Defense and Healthcare Stocks in Focus
According to Alex Sagal, global equity analyst at Wells Fargo Investment Institute, a substantial Democratic victory could limit real growth in government spending unless lawmakers reach a broader agreement covering both defense and healthcare, as noted on the same CNBC article.
Note that Democratic lawmakers were opposed to the Trump administration's desire to substantially increase the national defense budget. This could put the Invesco Aerospace & Defense ETF in focus.
Healthcare stocks, on the other hand, could benefit from expectations of policy changes. Democrats may push for restoring enhanced Affordable Care Act premium subsidies and reversing certain Medicaid reforms introduced under the One Big Beautiful Bill Act. State Street Health Care Select Sector SPDR ETF, which has added about 10% over the past month, may gain further.
Financial Stocks Could Face Regulatory Headwinds
Financial stocks could become another vulnerable area as Democrats gain control of both chambers of Congress.
Since President Donald Trump returned to office in January 2025, banking regulators have eased capital requirements, simplified the bank licensing process, proposed relaxed climate-related disclosure rules, rolled back enforcement actions and scaled back supervisory oversight.
However, a Democratic sweep could bring tougher scrutiny of banks, regulatory appointments and unfinished rules. State Street SPDR S&P Bank ETF could be under pressure.
Green Energy in the Sweet Spot?
Democratic leaders are generally proponents of clean energy development. They have historically supported tax incentives for renewable energy projects such as wind and solar. Many Democratic leaders have also supported electric vehicles and policies aimed at reducing reliance on fossil fuels. This puts First Trust NASDAQ Clean Edge Green Energy Index Fund in a potentially favorable position.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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State Street Health Care Select Sector SPDR ETF ETF (XLV): ETF Research Reports
State Street SPDR S&P Bank ETF (KBE): ETF Research Reports
Invesco Aerospace & Defense ETF (PPA): ETF Research Reports
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).