U.S. stock markets soared on Wednesday, against the backdrop of the Democratic Party's decisive victory in the 2026 midterms. However, this may not be the only factor driving the market upward.
Generali Investments Senior economist Thomas Hempell stated: "President Trump acknowledged the Democratic Party's victory in the midterms and expressed his willingness to cooperate with the opposition, which helped the market rebound amid expectations of avoiding disputes over the election results and preventing further political polarization."
On Tuesday night, Trump told The New York Times and The Wall Street Journal that he accepted the election results and would cooperate with the Democrats. At the time these reports were published, stock index futures also rebounded simultaneously.
On the eve of this year's mid-term elections, some individuals on Wall Street are growing increasingly concerned that Trump might challenge the election results. The lawsuit filed by the U.S. Department of Justice regarding the Alaska elections has sparked concerns about a delay in the announcement of results, a concern that usually subsides after the elections are over; however, if the results are delayed, market anxiety could be further amplified.
A Fed survey conducted by CNBC shows that among 30 fund managers, strategists, and economists, 63% believe that if the uncertainty surrounding the power structure is prolonged due to legal challenges to the election results, it will pose a "certain degree" of market risk. This proportion has slightly increased from 61% in September. In addition, 14% consider this to represent a "significant" market risk, up from the previous 7%.
Deutsche Bank's head of foreign exchange research, George Saravelos, stated that investors are now breathing a sigh of relief that Trump has accepted the outcome. As long as the president maintains this decision, it will "limit the consequences of extreme policies and reduce the risk premium."
"A X Factor"
In the past, Trump's statements have both driven the market up and caused it to fall. Jay Woods notes that part of the reason for the overnight rebound in the stock market was the president's "initial tone and reaction" to the election results; however, the focus of the market will then shift to whether Trump's latest stance can truly be sustained.
This chief market strategist said, "I think Trump will try his best to do and say the right things, but by 2 a.m., he might change his mind. He is an X-factor."
Woods added that he was "inspired" by the significant gains on Wednesday, but he also pointed out that the market may still face some headwinds in the coming weeks, such as concerns about inflationary pressures resulting from rising energy prices due to conflicts in the Middle East.
He said, "How Trump responds to these issues will help us determine how to navigate through these headwinds."
If Trump “continues to get along well with the Democrats,” Philip Blancato believes that the market will perform “very strongly” before the end of this year.
Historically, stock markets tend to rise after mid-term elections. However, this time, some people are concerned that the strong upward trend of the S&P 500 index since the beginning of this year may limit subsequent gains to some extent. After Trump's reaction mentioned above, Blancato believes that it is not entirely impossible for the S&P 500 index to reach 8,000 points by the end of the year, and stated that "a lot depends on him, but not entirely on him either."
On Wednesday, this market index rose by more than 1%. Based on the closing price, there is still about a 4% room for further increase to reach 8,000 points.
However, this chief market strategist warned that if Trump's future tone of speech cannot be consistent, investors should be prepared for any subsequent fluctuations.
He said, "The president will always be an unpredictable factor. Don't let one day define an entire year. This is just the market's immediate reaction to this matter. There are still many things that need to be clarified."
