Equity Market Commentary - November 2026

The author expects a post-midterm equity rally led by growth and financial stocks as earnings revisions improve and valuation pressure eases if inflation declines.

• October followed the consensus playbook: consumer staples and health care outperformed while technology, communications and growth stocks suffered.
• Historical evidence supports the post-midterm case: the S&P 500 has delivered a positive 12-month return after every midterm election since 1950, with an average return of 16%.
• Data center concerns are judged unlikely to derail technology demand because financially constrained local governments may accept infrastructure, public-service and education commitments from hyperscalers; Richland Parish and Dona Ana County are cited as examples.
• S&P 500 earnings growth expectations for 2026 rose from 14.8% at the start of the year to 32.4% on October 30, while the forward P/E fell from 22.1 times to 18.3 times.
• The market's next direction depends on the duration and depth of the Federal Reserve's tightening cycle, with persistent inflation threatening multiples and inflation moving toward the Fed's 2% target supporting valuation recovery.

Takeaway: Investors should favor the October laggards, especially growth and selected financial stocks, if the midterm effect persists, while monitoring monthly inflation data because the earnings outlook alone cannot offset further multiple contraction.