US MARKET (Friday)

Wall Street Enjoys Upbeat Start to 2009

Wall Street started 2009 with a big rally Friday as investors, brushing aside a disappointing report on manufacturing, sent the Dow Jones industrials up more than 250 points and to their first close above 9,000 in two months. All the major indexes shot up more than six percent for the week.

The market lived up to the hopes of many analysts that it would have a fresh start in the New Year after a horrific 2008. But many traders were also waiting to see how the market fares next week; they're cognizant of the fact that post-holiday volume was light and therefore Friday's trading might not be the best indicator of market sentiment.

Todd Leone, managing director at Cowen & Co., cautioned against reading too much into Friday's advance and said the first full week of the New Year should provide insight into investor sentiment for 2009.

"The first five days are usually very telling," Leone said. "I'm not sure we'll be up or down." He said an advance in stocks Friday wasn't a surprise as some investors start the year by wading into the market. He said selling is more likely to occur next week.

The Dow rose 258.30, or 2.94 percent, to 9,034.69, finishing the week up 6.1 percent. The blue chips last closed above 9,000 on Nov. 5, when they stood at 9,139.27.

Thorne contends 2009 could be a strong year for Wall Street because most investors are so shaken from the sell-off in 2008, which erased six years of gains in stocks. Market bottoms often emerge because investors are so pessimistic or because stocks seem incapable of making any sustained recovery.

"A bottom isn't formed in one day or even in one month but probably over several months," he said. "Expectations are extremely low for the economy, for corporate earnings and for the stock market itself."

"We're very confident that the $9 trillion that is in cash right now will look to find a home in better-performing assets," he said, referring to the amount of money invested in conservative but low-yielding areas like money market funds. Yields on safe investments like Treasurys have fallen to virtually nil as investors have clamored for safety and surrendered hopes of even earning a return on their money.

Next week brings a flurry of economic readings and potentially early comments from companies on their 2008 results and 2009 forecasts.

Traders will be anxiously awaiting a Labor Department report next Friday on December employment.

"The employment numbers will almost undoubtedly be very ugly. What will be interesting to see is what the market's reaction will be to those numbers," Thorne said. "We're also very interested to see what the corporate earnings reporting season will be like."