NEW YORK (CNNMoney.com) -- Stocks rallied Friday, with investors starting off a new year on the right foot, after an abysmal 2008, and the Dow closing above 9,000 for the first time since November.

The Dow Jones industrial average (INDU) rose 258 points, or 2.9%. It was the second-best start of the year on a point basis, according to Dow Jones. On a percentage basis, it was the sixth best start of the year.

The Standard & Poor's 500 (SPX) index gained 3.2% and the Nasdaq composite (COMP) rose 3.5%.

"It's the classic Santa Claus rally and people don't want to miss the boat, although the volume is pretty light," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

According to the Stock Trader's Almanac, a combination of the last five trading days of the previous year and the first two of the next have yielded an average return of 1.5% for the S&P 500 since 1950. The S&P is up 7.3% as of Friday's close.

"It's a nice start to the year, but we're not going to get too excited about it until we see a sustained advance on higher volume," said Matt King, chief investment officer at Bell Investment Advisors.

Saluzzi, King and other analysts are cautiously optimistic that Wall Street will recover some in 2009. However, the extent of any market recovery will depend on a variety of factors, including what kind of economic stimulus package the new Congress approves - and the depth of the recession.

Saluzzi said that investors need to be careful to not assume that the trend is now going to be up for most of 2009, as there is no reason why stocks couldn't rally for a bit and then retreat, making new bear market lows.

Wednesday brought a positive end to one of the worst years on record. The Dow lost 33.8% in the year, the third worst in its history, following a drop of 52.7% in 1931.

The S&P declined nearly 38.5% - its worst yearly performance since an earlier version of the broad stock index lost 47% in 1931. The earlier incarnation had 90 U.S. stocks in it.

For the Nasdaq, 2008's loss of 40.5% is the tech-fueled index's worst ever, going back to its inception in 1971.

All financial markets were closed Thursday for New Year's Day.

In the week ended Wed. Dec. 31, investors pulled roughly $1.2 billion out of equity mutual funds, according to tracking firm Trim Tabs. In the previous week, investors pulled $15.5 billion out of funds.

Economy: The manufacturing sector continues to weaken, according to the latest reports. The Institute for Supply Management's manufacturing index fell to a 28-year low in December, declining more than what economists had been expecting.

Next week brings a slew of economic reports, covering retail sales, auto sales, factory orders and construction spending ahead of the big December employment report due Friday.

Company news: Time Warner Cable and Viacom (VIA.B) have reached a new programming deal that will keep 19 Viacom cable channels on TWC's network. TWC is a unit of Time Warner, which also owns CNNMoney.com.

In other news, Bank of America (BAC, Fortune 500) has completed its acquisition of Merrill Lynch. Wells Fargo (WFC, Fortune 500) has completed its purchase of Wachovia.

A variety of oil services stocks rose in tune with the price of oil, including Halliburton (HAL, Fortune 500), ConocoPhilips (COP, Fortune 500) and Schlumberger (SLB).

General Motors (GM, Fortune 500) rallied on news that the government on Wednesday paid the first $4 billion in emergency loans to the troubled automaker. Additionally, on Friday it was reported that lender GMAC LLC had changed its pact with the company to give it more freedom in offering loans.

Market breadth was positive. On the New York Stock Exchange, winners topped losers five to one on volume of 1.04 billion shares. On the Nasdaq, advancers beat decliners nearly three to one on volume of almost 1.47 billion shares.

Bonds: Treasury prices tumbled, raising the corresponding yield on the benchmark 10-year note to 2.37% from 2.24% Wednesday. Treasury prices and yields move in opposite direction. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.

Lending rates were mixed. The 3-month Libor rate slipped to a 4-1/2-year low of 1.41% Friday from 1.42% Wednesday, according to Dow Jones. Overnight Libor slipped to 0.12% from 0.14%. Libor is a key bank lending rate.

Other markets: In global trading, Asian and European markets ended higher.

The dollar gained versus the euro and yen.

U.S. light crude oil for February delivery rose $1.47, or 3.9%, to $46.15 a barrel on the New York Mercantile Exchange.

COMEX gold for February delivery fell $4.80 to settle at $880 an ounce.

Gasoline prices rose 0.8 cents to a national average of $1.626 a gallon, according to a survey of credit-card swipes released Friday by motorist group AAA.  

At 7:40 ET the futures for the Dow Jones industrial average, the S&P 500 and Nasdaq were higher. Trading in the futures market is used to project market activity after the bell, though stocks do not always track futures accurately.

The markets are looking to put aside one of the worst years in Wall Street's history. Last year the Dow Jones industrial average fell 34%, the Standard & Poor's 500 index lost 39% and the Nasdaq composite index slid 41%.

The first trading session in 2009 comes on the heels of a rally that happened on thelast day of trading in 2008. On that Wednesday session, the Dow Jones, the S&P 500 and the Nasdaq all gained more than 1%.

Markets: Asian stocks started the year mostly higher, with Hong Kong's Hang Seng index finishing the day 4.6% higher. Tokyo was closed for an extended holiday. In Europe, markets were up in early trading.

Oil tumbled 8%, giving back some of the gains in a 14% New Year's Eve surge. U.S. light crude fell $2.85 to $41.75 a barrel. The U.S. dollar gained versus major international currencies, including the euro, yen and British pound.

Economy: On the agenda Friday is the Institute for Supply Management's monthly report on manufacturing, to be released at 10 a.m. ET. Economists surveyed by Briefing.com expect further contraction in the sector, reflecting a recessionary environment, with the index dipping to 35.4 in December from 36.2 in November.

Companies: Time Warner Cable (TWC) and Viacom (VIA.B) were finalizing details on an agreement that will allow TWC customers to continue to watch programming on Viacom's MTV Networks, which include Nickelodeon and Comedy Central.

A source close to the negotiations told CNN that TWC is expected to agree to pay a modest increase in fees to Viacom in the new deal.

Time Warner Cable, a publicly traded unit of CNNMoney.com parent Time Warner (TWX, Fortune 500), fell 31 cents to $21.45 a share in Wednesday trading, while Viacom's more activity traded stock class was up 85 cents to $19.06.