Watch subtle market influences

The stock market hasn’t exactly settled down, but at least it’s not going straight down like it did earlier this year.

The pace of corporate earnings, the economy and the lingering credit and housing slumps will continue to set the overall tone for the foreseeable future, but there are also many subtle trends and developments at work, including the following:

Stocks and the election

So far it looks like the presidential election indicator will be a dud this year. That’s the tendency of stocks to rally during years when the nation elects a new president. With the market down sharply so far in 2008, the indicator will fizzle this time around unless there’s a huge year-end rally.

Boomers and stocks

The oldest baby boomers are turning 62 this year, making them eligible for early Social Security benefits. Does it follow that retiring boomers will cash out of their stock holdings en masse, plunging the market into a long-term death spiral?

Liz Ann Sonders, chief investment strategist for Charles Schwab & Co., doesn’t think so.

For starters, she believes younger Gen X and Gen Y workers will boost their stock-market investing, providing some cushion against the expected boomer outflow. More to the point, Sonders notes the boomer generation spans nearly 20 years, making it unlikely a large share will cash in all their chips at once.

Then there’s a nugget gleaned from a recent Schwab investor study that hints many boomers won’t start withdrawals for at least several additional years because they don’t consider themselves “old.” That could convince many boomers to keep working and delay stock market selling, Sonders said. For what it’s worth, boomers in the Schwab study view old age as starting around 77.

Investors hang tough

Wild triple-digit price swings on Wall Street make it seem everyone is trading like a whirling dervish, but most investors appear to be fairly inert. A new, comprehensive report from the Investment Company Institute found that investors added money on a consistent basis to 401(k)-style retirement plans and IRAs last year.