The stock market is likely to kick off the new year on an up note Friday.
After a year of misery, the stock market went out with a bang Wednesday: The S&P 500 was up 1.4 percent, its strongest final trading day of any year since 1974. It was also the first time that the Dow and the S&P were both positive on the final day since 2003, and the first time since the boom year of 1999 that the Nasdaq ended the year on an up day.
On Friday, ISM manufacturing data for December is reported at 8:30am ET. Traders expect volume to be very light, as many investors take a long weekend after the New Year's Day holiday Thursday.
"They say the first five days of the year are very important, and it would be nice to see it be up," said Todd Leone of Cowen. He expects a quiet day Friday, similar to Wednesday's trading.
Oil may also be in the spotlight Friday. Oil finished the year Wednesday with a surprising 14 percent gain, at $44.60, up $5.57 per barrel. But it was still down 54 percent for the year and down 69 percent from its all time high, hit in July.
John Kilduff, senior vice president at M.F. Global, said oil moved in part on expirations of heating oil and gasoline contracts and partly on geopolitical events:
"It was thin volume already and the expirations just exasperated things. There was so much negative sentiment this month built up in this market that shorts just got squeezed," said Kilduff, a CNBC contributor.
Gazprom Wednesday said it was cutting off gas supplies to Ukraine, but Kilduff said Ukraine seems to have stockpiled sufficient supplies of natural gas. "This latest stoppage just reinvigorated the geopolitical premium. For oil prices to remain at these extreme lows, the world has to remain a quiet place economically and politically. Between the Ukraine and the Israeli- Hamas situation, geopolitics has perked up. That's helping us get back to more normal levels that are higher from here," he said.
Kilduff said oil should be trading at a fair value level of at least $50 per barrel.
2008 has left the stock market a broken heap. Stocks turned in their worst performance since 1931, with losses for the Dow a staggering 34 percent; the S&P down 38.5 percent, and the Nasdaq down 40.5 percent. The fourth quarter was the worst quarter for stocks since the fourth quarter of 1987. The Dow finished at 8776 Wednesday, up 108 or 1.25 percent, and the S&P was up 12.61 at 903.25, up 1.4 percent. the Nasdaq rose 26 points to 1577, an increase of 1.7 percent.
The S&P was higher for the month of December, up 0.78 percent, its first positive month since August and its best December since 2006. The Dow was down 0.60 percent for the month.