有多少坏消息在等着华尔街

After a strong start to the new year in very light trading, Wall Street gets serious.

The weeks ahead will prove the true test, as market pros return from the holidays to digest a barrage of bad economic news, a smattering of corporate profit warnings -- and possibly a new economic stimulus plan.

But with many of the negatives factored in already and the market primed for near-term gains after 2008's battering - analysts say the advance could stretch out a few more weeks.

"In the short term, I think it's sustainable," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "Investors are looking to the inauguration, a lot of tax-loss selling is out of the way, which is massive, and the recent advance, although on light volume, has been across the board."

But beyond that, he said it's likely Wall Street will drop back down to the lows of last November, or fall even further, as the focus on the recession resumes.

Stocks have rallied over the last week, experiencing the classic Santa Claus rally, as identified by the Stock Trader's Almanac. Almanac research shows the combination of the last five trading days of one year and the first two of the next has yielded an average return of 1.5% for the S&P 500 since 1950. So far, the S&P 500 has gained 7.3%, with Monday the last day of the period.

Labor market blues: In a heavy week of economic news, this week's big standout is the government's December unemployment report, due Friday. Employers are expected to have cut 475,000 jobs from their payrolls after cutting 533,000 jobs in the previous month. The unemployment rate, generated by a separate survey, is expected to have risen to 7% from 6.7% in the previous month.

"Investors should be prepared for the worst in terms of the labor market," said Matt King, chief investment officer at Bell Investment Advisors. "The unemployment rate could rise to more than 7% this month and may go to 8%, 9%, or 10% in the year ahead."

Despite the scary numbers, King thinks investors have likely already accounted for this amid the deepening recession.

Separately, the ADP survey of private sector employment is due two days ahead of the national report and will also be in focus.

And on Thursday, the latest weekly reading on initial claims - the number of jobless who are filing for unemployment - is due out before the market opens and it is expected to continue showing steep increases.