2009: Nowhere to go but up

Stocks are expected to start the recovery process in 2009, but volatility will remain with a big question mark hanging over corporate health.

By David Goldman, CNNMoney.com staff writer

December 31, CNN

NEW YORK (CNNMoney.com) -- As 2008 comes to a close and stocks mark their worst year ever, 2009 will be the start of a very slow and very painful recovery.

Investors should brace for wild market swings as companies and the economy struggle to rebound. This past year was marred by horrid corporate results, record high oil and gas prices, dismal housing news and a full-blown shakeup on Wall Street.

"A fair amount of damage has been done, and earnings needs to stabilize first," said Tobias Levkovich, chief investment strategist for Citigroup. "Before the patient gets better, let's make sure his condition doesn't worsen."

On many days, analysts predict markets could tumble on poor corporate earnings and sour economic news. But optimism about the new administration and apparent success of government interventions will help stocks skyrocket on other days.

That sounds just like 2008, which witnessed four of the five worst market days ever in the Dow Jones industrial average - but also the three largest increases.

2009 may be better, but stocks won't rise in a straight line to recovery. A majority of analysts expect that in the first months of the year, the S&P 500 index will test its 2008 low of 752, set on Nov. 20, even though the market has recovered more than 16% since then.

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