WASHINGTON — Americans will vote in midterm elections in just over a month, deciding control of Congress for the remainder of President Donald Trump's term. JPMorgan strategists have outlined three potential outcomes, with gridlock positioned as the most favorable for equity investors.

Historically, divided government correlates with stronger stock performance. Strategist Dubravko Lakos-Bujas highlighted that gridlock periods have delivered a 21 percent return from election day compared to 18 percent under single-party control over a two-year congressional term. Measuring from the start of a new Congress, gridlock yielded 25 percent returns versus 18 percent for unified control since 1950.

JPMorgan's team sees the election outcome favoring individual stock selection over broad sector rotations—a sharp contrast to the 2024 presidential race, where policy priorities had clearer sector-wide impacts. Under gridlock, JPMorgan identifies three beneficiaries: defense contractors, healthcare companies, and technology firms not heavily exposed to artificial intelligence data center buildouts, which could face delays under Democratic control.

Prediction markets currently show Democrats with an 88 percent probability of securing more than 218 House seats and over 49 Senate seats. But Lakos-Bujas cautioned that a Democratic wave does not guarantee a policy overhaul. Instead, he expects a Democratic majority would shift policy at the margins through funding negotiations, increased oversight, and efforts to reverse existing policies.

Healthcare stocks should benefit under either outcome. A Democratic Congress could reverse Medicaid cuts implemented during Trump's term, potentially lifting the sector. Defense spending enjoys bipartisan support regardless of party control.

JPMorgan singles out Lockheed Martin and Palantir as positioned favorably due to policy certainty and bipartisan backing. The strategists emphasize that investors should focus on individual stock resilience to specific legislative shifts or ability to benefit from congressional inaction rather than broad market plays.

The S&P 500 traded at $7,770, up 0.6 percent, as markets weigh political and economic factors ahead of the midterms.