Updated from 7:44 a.m. EST

While Monday's selloff shows how dangerous stock trading can be when world violence captures Wall Street's attention, analysts say recent events aren't likely to have a lasting impact on the market.

The assassination of Hamas' founder Ahmed Yassin in the Gaza Strip early Monday sent the major averages deep into the red, as investors worried that the Palestinians would retaliate against Israel and possibly even its allies.

The Dow recently fell 114 points, or 1%, to 10,072 and the Nasdaq was off 31 points, or 1.6%, at 1909.

But just as stocks bounced back from the Madrid bombings on March 11 and from the devastating terrorist attacks of Sept. 11, many observers say the market should get over this latest shock and start trading on fundamentals again in the near future.

"I think the market will shake this off," said James Luke, portfolio manager at BB&T Asset Management.

Luke said stocks were already in a corrective phase when the assassination was reported, so the news merely exacerbated the trend.

"It came at a vulnerable time in terms of people's concerns about the economy," agreed Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Wealth Management. "But it doesn't materially change the outlook for economic growth here in the states or the continued expansion of earnings, which we think will pull us out of this correction."

Part of the reason that investors reacted so negatively Monday, according to Luke and Fitzpatrick, is that heightened fears about terrorism do not bode well for President Bush's re-election in November.

Some investors are concerned that if Senator John Kerry were elected President he would end tax breaks on stock dividends and capital gains. "This kind of coverage is detrimental to the Bush campaign," said Luke.

Still, Fitzpatrick said worries about the election have been overblown . Even if Kerry were elected, Congress could remain in Republican hands and stocks have historically performed best whenever there's been stalemate in Washington.

Jeff Macke, founder and president of Macke Asset Management, said terrorism could become a greater concern as the Olympics and election approach, but he thinks stocks are "due for a bounce at this point," noting that the level of fear in the marketplace has shot up. The CBOE Volatility index, which is considered a contrarian indicator, surged 11% to 21.34 Monday.

Over the past year, the market has largely brushed off a slew of bad geopolitical news. Investors barely raised an eyebrow when two rockets were fired at a hotel in Baghdad on Thursday and a bomb killed three in Basra.

Even positive geopolitical events have had little impact on stocks. The capture of Saddam Hussein in December was widely expected to send stocks soaring. Instead, the major averages ended the next day in the red.

Rumors that Pakistan had cornered al Qaeda's second in command, Ayman al Zawahiri, failed to send the market higher last week, although investors were said to be disappointed Monday on news that this particular leader may have eluded the military.

"It seems to be one of those stories that's only important when the market says it's important," said John Caldwell, chief investment strategist at McDonald Financial Group

Seth Scholar, a senior research analyst at Sand Hill Advisors, said the market has proven to be very resilient when geopolitical concerns have flared up in the past and he believes it would take something "eye opening" to send the market spiraling lower for any length of time.

"I think some level of risk has been included, but it doesn't include a spectacular attack," he said.

If the U.S. were attacked or an event occurred elsewhere in the world that resulted in a huge loss of life, that could send stocks on a protracted slide. But after 9/11, some analysts say investors are better prepared, even for this kind of tragedy.

"Are we ever going to have something as bad as 9/11? I don't think so," said Jeff Matthews, head of the Connecticut-based hedge fund Ram Partners. "But if we got through that, I think we can get through anything."

If you liked this article you might like

Coming Week: Earnings Flood

Coming Week: Earnings Flood

Don't Write Off Inflation Threat

Don't Write Off Inflation Threat

No Quick Fix for Trade Gap

No Quick Fix for Trade Gap

Merrill's Doll Sees Stocks 'Muddling Through'

Merrill's Doll Sees Stocks 'Muddling Through'

Downhill From Profit Peak

Downhill From Profit Peak