lockheed martin receives approximately 70% of its revenue from the US government. Medicaid accounts for three-quarters of the population. Morena Healthcare premium income. coinbase We are waiting for Congress to finish writing regulations regarding virtual currencies.
For some of America’s biggest companies, Washington is part of their business model. Now, the midterm elections could change who has influence.
If Democrats win one or both chambers of Congress, they will have new leverage to investigate corporations, challenge federal spending and demand concessions from Congress. However, there will be limits to its scope. President Donald Trump will maintain vetoes and broad powers over tariffs, immigration and federal regulations.
Historically, stock prices have fared better under divide-and-conquer. A Morgan Stanley analysis released Thursday found that under Republican presidents, the S&P 500 rose an average of 23% in the year after the midterm elections that saw a divided Congress, compared to 16% when Democrats controlled both chambers. Analysts often attribute this pattern in part to gridlock in Congress that limits sweeping policy changes.
Still, some analysts caution against assuming this pattern will repeat.
“While we don’t think that blueprint will hold up this time, there are still plenty of reasons to take a constructive view of the U.S. stock market,” said Ariana Salvatore, head of U.S. public policy research at Morgan Stanley.
For investors, the midterm elections could reshape which companies maintain dominance in Washington, especially in industries such as defense, health care, banking and artificial intelligence.
“There are some policy changes that could move the market, at least in certain segments,” said Jeff Buchbinder, chief equity strategist at LPL Financial.
Congressional Oversight and Investigation
Controlling either the House or the Senate would give Democratic committees the gavel and subpoena power, allowing them to request documents, compel testimony and subpoena executives to hearings.
Businesses are already getting a preview.
On October 21, Sen. Richard Blumenthal (D-Conn.), the top Democrat on the Senate Permanent Subcommittee on Homeland Security and Governmental Affairs, requested records related to President Trump’s White House banquet hall from the following donors: Cisco, sales force, ServiceNow and kraken. apple and Nvidia Each put $25 million into the project, according to records obtained by The Washington Post.
Rep. Jamie Raskin, D-Maryland, is seeking separate records on tariff exemptions, including communications involving former Apple CEO Tim Cook, as Democrats investigate whether President Trump used trade policy to reward political allies and donors.
Although the donations do not prove wrongdoing or preferential treatment, a congressional investigation remains risky. Subpoenas consume executive bandwidth, reveal internal communications, and generate unpredictable coverage. Few CEOs enjoy sitting on the witness stand in front of lawmakers and television cameras.
Monica Guerra, head of policy and geopolitical strategy at Morgan Stanley, said she expects Democrats to cast a broader dragnet, saying, “There will be more volatility because of the negative headlines.”
Democrats have expressed interest in Trump family businesses, government contractors, companies linked to Donald Trump Jr.’s 1789 Capital, and companies linked to Elon Musk and DOGE.
Construction continues on the new helipad on the South Lawn and East Wing Ballroom of the White House on August 10, 2026 in Washington, DC.
Andrew Harnik | Getty Images
federal spending
Then there’s the most basic power Congress has: the power to decide where money goes.
President Trump’s Tax Cuts and Spending Act of 2025, known as the “One Big Beautiful Bill,” is expected to reduce federal Medicaid spending by $911 billion by 2034, according to a KFF analysis of Congressional Budget Office estimates. KFF is a nonpartisan, nonprofit organization that provides information on health policy. Meanwhile, new work requirements for Medicaid enrollees, set to go into effect Jan. 1 or sooner in some states, could reduce eligibility and increase pressure on providers to pay as state budgets tighten.
Molina Healthcare received $32.2 billion from Medicaid, or 75% of its premium income in 2025, according to the company’s annual SEC filing. In the same filing, Molina warned that losing government contracts or failing to renew them on favorable terms could significantly reduce premium income.
The Democratic-led Congress cannot repeal the 2025 law on its own, but it can pass budget negotiations to change funding or delay some cuts.
“They’ll probably push back on Medicaid cuts,” Buchbinder told CNBC, noting that maintaining coverage would help stabilize enrollment for Medicaid insurers and patient numbers for hospitals.
According to KFF, hospitals are facing their own predicament. A decline in the number of insured patients may increase uncompensated care, while national budget pressures may reduce reimbursement rates. Congress created a $50 billion, five-year rural health fund to soften some of the blow, but KFF and health care providers said the money won’t fully offset widespread Medicaid cuts.
Even with the advancement of the Democratic Party, there is a possibility that both paths in healthcare will still be cut off. The same lawmakers seeking to protect Medicaid funding could also increase scrutiny of insurance companies, hospitals, and drug companies over prices, coverage, and profits.
People visit a Lockheed Martin booth displaying models of military transport aircraft during an arms trade fair in Hanoi, Vietnam, December 19, 2024.
Khanh Vu | Reuters
Defense contractors are facing a fight over which weapons and programs Congress will continue to fund. The White House has requested $1.5 trillion in defense spending for fiscal year 2027, with a focus on replenishing weapons, increasing readiness and covering other needs, some related to the Iran war.
The White House has requested $1.5 trillion in defense spending for fiscal year 2027, while asking Congress for an additional $87.6 billion in fiscal year 2026, primarily for military operations related to Iran.
Congressional Democrats could object to some spending related to Iran and Israel while seeking more aid for Ukraine. But analysts say a bipartisan agreement on China deterrence, nuclear modernization and missile defense could protect other key programs as well.
For contractors, that difference can mean billions of dollars in orders.
For example, Lockheed Martin recently reached a framework agreement with the Department of Defense for 850 F-35 fighter jets over 10 years. However, the agreement is not yet a final contract, and Congress must approve and fund the multi-year purchase.
“You want to be a stock picker, not just riding across sectors,” Guerra told CNBC, pointing to areas like shipbuilding, autonomous systems and missile defense as potential winners.
Drone footage of the Google Storey County Campus data center at the Tahoe-Reno Industrial Center in Sparks, Nevada, on October 9, 2026. Spending on AI data centers by hyperscalers is fueling a rise in debt issuance in the tech sector.
Daniel Cole | Reuters
rules and regulations
For crypto companies, the midterm elections could decide whether President Trump’s regulatory changes become permanent law or remain vulnerable to the next administration. Industry efforts to make it permanent stalled in September. The Senate failed to advance the Clarity Act, a broad market structure bill backed by President Trump.
Coinbase and stablecoin issuer shares circle When this measure failed, the stock fell by 11%.
Passing the bill in the next Congress could come at a cost. A Democratic victory would give the party more clout as it calls for stricter consumer protections, limits on high-yield stablecoins and increased oversight of President Trump’s cryptocurrency business.
“In some ways, the industry doesn’t really care who gets elected,” said Sam Stovall, chief investment strategist at CFRA Research. “They just want to know what the rules are going to be next year.”
Banks also want durability.
Federal regulators estimate that the proposed capital review could reduce requirements for large banks by about 4.8%, freeing up billions of dollars for loans and shareholder payments. The Fed makes the rules, but the Senate controls who fills future vacancies, and congressional committees can pressure regulators through hearings and investigations.
“Important things can happen at the regulatory level,” Buchbinder said.
People participate in a protest against the CoreWeave AI data center outside City Hall in Kenilworth, New Jersey, on October 21, 2026.
Stephanie Keith | Getty Images
AI may be the trickiest thing in political trading.
President Trump has made rapid data center construction an economic and national security priority. Morgan Stanley expects hyperscalers to: microsoft, Amazon, alphabet and Meta It plans to spend more than $1 trillion on capital projects in 2027, even as construction plans face growing opposition over electricity, water usage and infrastructure costs.
According to CNBC’s National Economic Survey conducted in October, 63% of registered voters oppose locating data centers within 10 miles of their homes, while only 13% support it. The level of opposition is higher among Democrats than among Republicans.
The friction has already reached Congress. In September, the House of Representatives voted 417-3 to require state regulators to consider covering the additional power infrastructure costs needed to serve large data centers. The bill stalled in the Senate on a 57-43 procedural vote. That’s because Democrats argued the bill was too weak and called for mandatory protection instead of trusting the industry’s own police.
Therefore, the midterm elections could decide who takes power. A Democratic victory could make it more costly for technology developers to update the grid, raising project costs in the same way that access to electricity is constraining new construction.
But Congress is only part of the equation. State regulators, utility companies and local governments will decide where projects will connect to the grid and what facilities will be built.
“We think elections can have meaningful results, but they are very localized,” Salvatore said.
