Late Rally Saves Wall Street

For the entire year, GDP should increase by 0.8%, Goldman predicted.

"The pattern over the last few days is a higher open and by the afternoon we're in a downtrend," said Hank Smith, chief investment officer with Haverford Investments. "The stock market is now catching up with the bond market in saying the Fed needs to cut. It is clear to the equity market that the risks of a recession are greatly enhanced or we're already in one."

Robert Pavlik, chief investment officer with Oaktree Asset Management, said that bargain-hunters jumped in after the market reached a 10% correction level again.

"Lowered expectations are already priced into stocks, and the markets will look past the bad news and forward toward better conditions later on this year," said Pavlik. "Another boost to stock prices could potentially come if the Federal Reserve's FOMC policy committee steps up and cuts the fed funds rate by a larger-than-expected 50 basis points on January 30."

Last time out, rumors that Countrywide Financial (CFC Quote) would declare bankruptcy and pessimistic comments from AT&T's (T Quote) CEO coupled to knock down the major averages, with the bulk of the selloff coming in the final hour.

Countrywide, which fell 28% in the prior session even after denying the bankruptcy rumors, continued to weigh on financials. Shares were down another 6.4% after the lender reported that foreclosures in December more than doubled from a year earlier.