On Monday, veteran strategist Ed Yardeni warned on Bloomberg TV that a Democratic sweep of Congress could be a “very cold shower” for stocks. “Usually the market loves gridlock, but in this situation we’re talking about much more partisanship,” he said.
Two days later, Democrats won both chambers and stocks rallied. DIA, the Dow ETF, rose 3.1% on 4 November, its best day since 9 April 2025, the day tariffs were paused. Nearly 90% of US-listed equity ETFs closed higher.
The rally had a clear shape. QQQ, the Nasdaq-100 ETF, gained 1.0%, and the technology ETF XLK finished flat. Investors spent the day sorting the businesses that gain from a divided Washington from those that lose.
The winners: housing, health care and airlines
Housing led. ITB, the homebuilder ETF, jumped 7% as Treasury yields slipped, and the medical device ETF IHI rose almost as much. The broad health care ETF XLV added 3%.
Cheaper oil helped the businesses that burn it, and the airline ETF JETS gained 6.7%. Clean energy rallied too, with the solar ETF TAN up 5.7%. Consumer funds joined in: XLY, which holds retailers, restaurants and carmakers, rose 4.3%.
The losers: oil, defense and chips
Energy followed oil down. XLE, the biggest energy ETF, fell 4.7%, and the oil and gas drillers in XOP lost 6.4%. Defense funds slid on worries that a Democratic Congress will curb military spending, and XAR dropped 3.6%.
Chips were the surprise. SMH, the biggest semiconductor ETF, fell 2.7%, with Nvidia and Micron among its decliners. Daniela Hathorn, senior market analyst at Capital.com, said tech stocks are sensitive to possible congressional scrutiny of AI investment and data center expansion, the spending behind much of this year’s chip demand.
The year’s leaders took the hit
The day ran against the year. SOXX, the chip ETF, was up 55% in 2026 through Tuesday, and XLE 52%. Both fell on Wednesday.
Homebuilders, airlines, medical devices, solar and communication funds had all lost ground this year. Each rose more than 3% the day after the vote.
The pattern held across the market. The fifth of US-listed equity ETFs with the biggest gains this year rose a median 1.3% on Wednesday, about half as much as the fifth with the weakest. A third of the year’s leaders closed lower.
Yardeni warned of a cold shower. Instead the Dow ETF had its best day since April 2025, the year’s laggards led, and 2026’s biggest winners, chips and energy, gave back ground. For one day, the year’s scoreboard flipped.
See the full breakdown on ETF Copilot: etf-copilot.com/go/substack/midterms-market
Written by the ETF Copilot research team. Data as of 4 November 2026. Nearly 90%: 907 of 1,043 US-listed equity ETFs at least three years old with at least $20M in assets, no leveraged or inverse funds. This is not investment advice or a recommendation to buy or sell any security. ETF Copilot receives no compensation from the issuers of the funds mentioned. Managers of ETF Copilot may or may not hold positions in the funds mentioned.
Sources: Ed Yardeni on Bloomberg TV, 2 November 2026 (via Yahoo Finance); TheStreet market close, 4 November 2026; CNBC on defense stocks; Yahoo Finance, 4 November 2026.