Trading One Uncertainty for Another in Iraq

For the first time in months, U.S. forces seem to have the upper hand in Iraq, moving two days ahead of schedule to transfer power to Iraqi authorities and catching insurgents off guard.

But after the positive shock of the largely ceremonial handover of power wears off, the situation in Iraq is expected to remain much as it has been for the past year. Violence will continue, U.S. soldiers will die, financial costs will continue to rise, and Bush's re-election chances will remain cloudy. For all of these reasons, U.S. stock investors need to greet the transfer of power with a healthy dose of skepticism and caution.

Earlier this month, the U.N. unanimously approved a resolution to return power to the Iraqis by the end of June. U.S. officials tried to catch Iraqi insurgents off guard by making the transfer today, two days ahead of schedule. ...