Year ends on losing note

Whoopsy - just when no one was looking, Wall Street turned in a pretty sour session to end 2009. The Dow closed at 10,428, down about 120 points on the day. Of course, that still leaves the index up 19.6 percent for the year, including a mega-rally from its March low. What the rally was about remains a source of great debate, though the general view is that it was less the result of good stuff that happened and more a case of bad stuff avoided. Really bad stuff. So what now? Well, putting aside the bromide that nobody knows anything, it's worth mentioning that stocks seldom have stupendous years back to back. "There are long, long periods of time when the market and the economy go two different ways," investor/author Barry Ritholtz told the NYT. "A rallying market doesn't necessarily mean the economy is healing."

In 2010, analysts expect financial stocks to continue to rise, though at a slower pace. Investors acknowledge that the sector faces several obstacles -- the threat of increased oversight from the federal government, for instance, and the potential for more losses on bad loans -- that could curb growth. "What are the new rules of the world? What does the industry look like? How do we plan strategically for growth?" said Tobias Levkovich, Citigroup's chief equity strategist. "These are significant unknowns to investors, but they are pretty important to determining the future of the industry." Another question is how companies, particularly banks, will pump up revenue. In the aftermath of the financial crisis, companies achieved better-than-expected earnings through heavy cost-cutting, but many now seem reluctant to cut any more, fearing that quality will suffer.