American investors will be watching Wall Street closely tomorrow, with the Dow Jones expected to hit its highest point all year.
Some say it could be the beginning of the end of the recession, but other analysts believe it might just be a blip on the recessional radar.
The stock market closed Friday with a surge of excitement and worry. The Dow rallied to its best level all year, climbing past the 9000 mark. Investors are hoping the gains are a signal that the worst of the economic downturn is over.
"It's very clear the recession is ending this summer and a recovery will be beginning as a result," says economist Laksham Achuthan.
But analysts are concerned that Wall Street is too far out ahead of an economy that is still ailing.
"The number itself is purely psychological," says investment strategist Jim Awad. "We are out of the operating room but you're still in recuperation."
The rally, which produced an 11 percent gain in only two weeks, came after 77 percent of reporting companies had better-than-expected profits. But analysts say those improvements came mainly as a result of cutting costs, which means cutting jobs.
"They fired people and they closed down plants and they did all kinds of things that are very painful," says Mr Acuthan. "But it sets the stage for a very healthy recovery."
Despite the optimism unemployment is still inching towards double digits, housing prices are still falling in most places and the economy is propped up by trillions in government bailouts. But can an economy on life support sustain the market's steep gains? The Dow is up 39 percent since March, the Nasdaq up 55 percent.
"I would not at all be surprised to see a correction in the stock market some time in September or October," says David Wyss, chief economist for Standard and Poor's. "Maybe up to about half the increase, down around 15, 20 percent."
And the stock market is an early predictor of recovery, so even when it does find its footing, analysts say it will be months, if not years before the 7 million jobs that were lost in this recession start coming back.
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