This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Market Preview: Clouded by Question Marks

NEW YORK ( TheStreet) -- And now, the worries set in.

Summer's over and the rest of 2012 suddenly has more than a few big question marks hanging over it. The sellers traditionally come out of the woodwork in September and October has a talent for infamy but it's more likely that November that will take center stage this time around.

"What could be more uncertain than handicapping a presidential election more than two months away, and then projecting which agendas will be adopted by the supposed victor and approved by a yet-to-be reconstituted Congress?," wrote Sam Stovall, chief equity strategist at S&P Capital IQ, in commentary released Tuesday. "Regardless of who wins the election, or how the majorities shift in Congress, the victors won't be sworn in until January 2013, nearly a month after the U.S. faces the possibility of falling off the fiscal cliff. Therefore, it will be incumbent upon the lame-ducks to resolve this impasse in order to allow for the traditional post-election rally to materialize."

Interestingly, the historical data is soundly in favor of the Democrats when it comes to stock performance as well as growth in both GDP and corporate profits, according to S&P.

"Since 1900, there have been six stretches of Democratic presidents and six for Republicans, during which the S&P 500 rose a median 12.1% in price during each year that a Democrat occupied the White House, as compared with a median 5.1% gain under Republican administrations," Stovall noted. "In addition, since 1949, U.S. real GDP increased a median 4.2% per year under Democrats, versus 2.6% per year under Republicans."

Corporate profits, measured on a GAAP (generally accepted accounting principles) basis, have risen a median 10.5% per year since 1936 during Democratic administrations vs. an 8.9% advance under the GOP, S&P said.

"So while one might say that Democrats are the 'tax and spend' party, the important part of that equation may be the 'spend,'" Stovall wrote. "When you spend, that usually improves the economy and increases corporate earnings."

Citigroup, however, has a different take. The firm argues a victory for the challenger in a presidential election may be the best way forward for equity bulls, regardless of party affiliation. The data shows a median gain of 7.4% for the S&P 500 in the first year of the new term following an incumbent's loss vs. a rise of 1.2% if the incumbent stays in The White House.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.82 0.91%
FDX $163.19 -0.15%
FB $105.75 -1.10%
FNSR $12.28 1.40%
GOOG $748.29 -1.00%


Chart of I:DJI
DOW 17,812.19 +19.51 0.11%
S&P 500 2,089.14 +2.55 0.12%
NASDAQ 5,102.8080 +0.33 0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs