Morgan Stanley projects Democratic return to House control in 2026 outlook

Morgan Stanley’s 2026 election outlook points to Democrats regaining control of the House of Representatives. The firm characterizes the Senate race as effectively even, while giving Democrats a narrow advantage.

Democrats would need to gain four seats to reach a majority in the 100-member Senate. Morgan Stanley’s August assessment counted 220 House seats held by Republicans and 215 held by Democrats. Under that distribution, Democrats needed three net pickups to take the chamber.

The firm also places the contest in a broader historical context. Since 1922, the president’s party has lost an average of 30 House seats and four Senate seats in midterm elections. Morgan Stanley says stock markets have frequently done better after midterm voting.

A change in congressional control would not necessarily produce sweeping legislation. Morgan Stanley says divided government could restrict major policy changes. It also identifies inflation, economic expansion and corporate earnings as factors that may have a larger effect on broad markets than the election outcome.

Voter preferences in the April 2026 CNBC survey were close. Forty-nine percent of registered voters favored a Congress controlled by Democrats, while 45% favored Republican control. Another 6% were undecided.

The available research supports Morgan Stanley’s election and market outlook, but it does not establish a broad consensus among Wall Street firms. The central investor question is whether congressional control changes and, if it does, whether the result produces unified or divided government.