19 Midterms, 19 Stock Gains. This Time Your Power Bill Is on the Ballot.

The S&P 500 has risen in the 12 months after every midterm election since 1950. That is 19 for 19. Americans vote again in 11 days. This year, the AI trade, the market’s favorite bet, faces a test the old record never had to price. Voters are angry about what AI data centers are doing to their electric bills.

Wall Street has one date circled, and it is not the Fed. It is November 3. Even war planning seems to run on that clock: The New York Times reported this week that U.S. and Israeli plans for new strikes on Iran point to after the midterms.

The market’s own history with that date is unusually kind. Since 1950, the S&P 500 has been higher 12 months after every midterm election, 19 times out of 19. The average gain was about 15%, per J.P. Morgan Asset Management.

Why the record holds. The usual explanation is simple. Before a midterm, investors do not know who will control Congress. After it, they do. Uncertainty leaves, and money that waited on the sidelines comes back. The winner matters less than the fact that the race is over.

It even worked with the Fed hiking. This year’s Fed raised rates in September and is expected to raise them again in December. The Fed was raising rates in 2018 and 2022, too. In 2018 it raised rates four times. In 2022 it raised them seven times, including a three-quarter-point increase six days before the vote. The S&P 500 still rose nearly 12% in the year after the 2018 midterm, and about 14.5% after 2022.

The 2018 path was not smooth, though. Between the vote and Christmas Eve, the S&P 500 fell almost 15%. Then it recovered. A 19-for-19 record describes where the market ended up a year later. It says nothing about the weeks in between.

This year, the market has run on one engine: AI. The companies behind it are still spending heavily to make it faster.

What is different this year. The AI build-out has been the engine of this market, and it runs on electricity. Electricity prices rose 4.4% in the year to September, faster than the 3.7% rise in prices overall, per the Labor Department. A Rhodium Group report found prices have risen in every state but Nevada and Hawaii since 2024.

Data centers draw huge amounts of power, and many voters blame them for higher rates. In a Gallup poll in March, 71% of Americans opposed data centers in their own communities. The Cook Political Report has counted nearly 50 campaign ads about data centers. In Ohio, Democrat Sherrod Brown is running ads calling Republican Senator Jon Husted the “face of data centers.” And New York has already passed the first statewide pause on new giant data centers, the Brookings Institution reports.

That is why the industry is racing to make AI use less power per job. A chip that does more with less electricity is easier to defend at a town hall.

The fight is local. Here is the part most investors miss. Most of the rules on where a data center plugs in are set by the states. So are the rules on what it pays for power, through state utility commissions. That makes the 36 governor races on the ballot matter to the AI trade as much as the fight for Congress. Pennsylvania’s governor has already signed an order adding new rules for data centers.

Betting markets have already made their call on Congress. Kalshi is a federally regulated prediction market. On October 12, it gave Democrats about a 90% chance of winning the House and 62% for the Senate. With a Republican in the White House, that would mean split government. Split government has usually meant fewer big new laws. Markets have tended to like that. The state fights over power lines will not be settled on one night.

Meanwhile, the bill keeps arriving every month, whoever wins.

Where that leaves you. The midterm record is real, but it is not a promise, and it does not pick the path. An S&P 500 fund is now a large bet on AI-related companies. This year, that bet carries a political risk it did not carry in 2018 or 2022. Would a 15% drop like 2018’s push you to sell? Then set your mix of stocks and cash now, not in December. A six-month Treasury bill paid 4.29% on Thursday. In thirty years of advising clients, I never saw an election bet beat a portfolio its owner could hold through a bad month.

This morning brings the final University of Michigan survey of what Americans expect inflation to be. S&P Global’s October business surveys come out this morning, too. The Fed meets October 27 and 28. Then comes November 3.