Uncertainty at root of stock swoon

NEW YORK – The equity market’s inexorable slide into the summer doldrums has many wondering what the next catalyst will be. Some analysts say the sideways pattern could continue straight through the presidential race. Despite what you might think, however, Wall Street doesn’t particularly care who wins. It just hates not knowing what will happen next.

“The market does not like uncertainty,” said Sam Stovall, chief investment strategist for U.S. equity research at Standard & Poor’s Corp.

Many investors, professional and novice alike, think another term for President Bush would be better for stocks. But the market has posted more significant gains under Democratic presidents. Going back to 1945, whenever a Democrat was in office, the Standard & Poor’s 500 gained an average 10.7 percent per year, versus only 7.6 percent during Republican administrations.

But incumbents definitely held an edge during the same period. During the same time frame, whenever they have been re-elected, the markets rose an average 7.5 percent in the subsequent year.