The market's lack of pop despite such positives reflects a reassessment of risk in the wake of the Internet bubble. The S&P 500 was trading at a price-to-earnings ratio of 37 at the end of June 2001. The ratio was less than 20 three years later, and the market has traded down since then. Not surprisingly, onetime dot-com darlings such as Internet Capital Group (ICGE) and Priceline.com (PCLN - Get Report) are among the worst performers in the past three years. (Conversely, security outfits such as Viisage Technology (VISG), Magal Security (MAGS - Get Report) and Kroll (KROL), which is being acquired by Marsh & McLennan (MMC - Get Report), are among the best performers since 9/11.)
As P/Es have come down, the price of oil has risen, although as much as $10 a barrel of the rise may reflect a "terrorism premium."
Many analysts also attribute the stock market's relatively lackluster gains in part to investor fears of subsequent terrorist attacks in the U.S. or the oil-rich Middle East. To the surprise of some, such fears persist despite the calm that ultimately prevailed at the Olympic games and Democratic and Republican conventions this summer.
"I would have thought that people would be more anesthetized to it by now," said Sam Stovall, chief investment strategist for Standard & Poor's. "But it's always remaining in the background and convincing people to be more conservative."