Democrats win the House and Senate, and Trump will have to negotiate more; US stock market reacts cautiously
According to the Investidor Sardinha channel, the new scenario in Washington brings less uncertainty, but Brazil's internal problems continue to weigh more on the stock market, interest rates and the dollar.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INVESTIDOR SARDINHA · 3 MIN
Democrats won the majority in the United States Senate and House in the midterm elections, and President Donald Trump will rely on negotiation to move forward with his projects. According to the channel Investidor Sardinha, the numbers were 54 to 44 seats in the Senate and 258 to 177 in the Chamber.
The presenter compares the situation to that of President Lula in Brazil, who, according to him, will have a Congress with many more seats on the other side starting next year. He notes that American bipartisanship reinforces this effect, as voters tend to vote according to the president's instructions.
According to the channel, a president losing both Houses in the same midterm election has only occurred three times since 1945: Truman, in 1946 (S&P 500 up 4.6%), Eisenhower, in 1954 (up 30.5%) and Bush, in 2006 (up 6.7% in the following 12 months). For Trump, the outcome is still unknown.
Market reaction
In the first 12 hours, S&P 500 futures fell 1.3% and Nasdaq futures fell 2.2%. In the morning, the S&P 500 rose 1.1% and the Dow Jones gained more than a thousand points. The 10-year Treasury fell 4.92%, the DXY index fell to a one-month low at 101.3 and gold rose 2.9% to $4,054.
The channel attributes the initial drop to fear of heavy regulation on artificial intelligence and big tech, defended by Democrats and rejected by Trump. The recovery, according to him, came from the fact that Trump accepted the result and a locked-down Congress reduced unpredictability. In the presenter's assessment, the Federal Reserve is also less exposed to pressure from the president, who defends 1% interest rates.
History favors a reading of relief: according to the data shown in the video, the American stock market rose in the 12 months following all 19 midterm elections analyzed, with an average increase of 14.8%. The presenter explains that the market values the end of uncertainty, even in the face of a bad scenario, and highlights that past profitability does not guarantee future results.
What changes for Brazil
For Brazil, the channel sees the weaker dollar as a tailwind, but warns that the effect depends on American interest rates. The Fed's interest rate is at 4% (top of the range), with inflation at 3.7%. There was an increase in September, the first since 2023, and the next meeting, on December 8 and 9, predicts a new increase. Higher interest rates in the US attract back capital that would seek emerging markets.
In the local market, the Ibovespa rose around 1%, and the dollar fell from R$5.49 to R$5.46. The presenter recalls that the Brazilian stock market has fallen 21% since its peak on October 9th and that, in the year, the CDI yielded 11.6%, against 4.2% for Ibovespa. For him, the stock market will follow the Brazilian calendar, and the internal fiscal and political problem weighs more than the American election.
Regarding tariffs, the channel states that tariffs do not end, although the negotiating table has changed. According to the presenter, 23.1% of Brazilian exports to the USA pay a surcharge, and sales to the country fell 9.7% from January to August 2026. He assesses that the issue is secondary for the American Congress and that Trump can veto changes.
In Investidor Sardinha’s assessment, the practical difference for the investor is small. Big techs like Nvidia and Meta are likely to come under greater scrutiny, which could affect the Nasdaq, and an interest rate hike in December in the US would put pressure on Brazilian fixed income.
Automatically translated from Portuguese.
