Sectors bracing for a potential Washington shift that could reshape the balance of power

Election outlook and oversight

Corporate America is preparing for a possible change in congressional control as midterm results approach. Polymarket gives Democrats a 72% chance of winning both chambers, and puts a Democratic House with a Republican Senate at 23%.

The odds of Republicans retaining both chambers are 6%. A divided Congress would give Democrats greater influence over funding and investigations, but legislation opposed by Trump could still face a presidential veto.

Energy and affordability proposals

A Democratic Congress could examine the administration’s efforts to roll back emissions rules. Lawmakers might also use the Congressional Review Act to reverse regulations that ease sales of gas-powered trucks and SUVs.

Democrats could pursue affordability measures, including limits on large institutional landlords, UBS said. Those proposals would still be subject to Trump’s veto. In 2022, a Democratic-controlled Congress passed the Inflation Reduction Act, which included hundreds of billions of dollars for climate and energy security, along with expanded tax credits for renewable energy, nuclear power and electric vehicles.

Technology and healthcare scrutiny

A slowdown in artificial intelligence and data-center investment could weigh on semiconductor-equipment companies Applied Materials, Lam Research and KLA, as well as power providers Constellation Energy and Vistra. Data-center builders Quanta Services and Vertiv could also be affected.

A Democratic majority could use subpoenas to require technology executives to testify or provide records about harmful AI-agent behavior. Societe Generale said the AI trade was likely to continue, citing Democrats’ limited prospects of securing enough votes to override a veto and Republican control of key federal agencies.

Healthcare faces mixed prospects. Greater scrutiny of Medicaid and Medicare Advantage could pressure insurers, but TD Cowen sees limited risk of major industry changes or broad structural reform. A Democratic House could also raise the prospect of taxes to finance more health spending.

Defense, banks and crypto

A Democratic-controlled House could renew scrutiny of military spending. Analysts noted Congress has not yet appropriated funds for multibillion-dollar contracts signed by major defense companies to replenish stockpiles. A budget vote is unlikely before 2027.

Banking rules could also become a focus. The last major congressional overhaul was the 2010 Dodd-Frank law, which tightened capital rules, established a consumer watchdog and introduced new trading restrictions. Recent quarterly results from JPMorgan, Citigroup, Goldman Sachs and Wells Fargo suggested the dealmaking and trading boom behind record first-half earnings may be slowing.

Analysts do not expect the election to significantly affect cryptocurrency prices, but say it could shape the pace of crypto legislation. Reuters has reported that Democratic lawmakers are preparing investigations into crypto companies linked to Trump and his family, citing potential conflicts of interest.