As investors breathe a sigh of relief that the wild ride of 2009 is over, they're peeking over the parapet to see if 2010 offers more tranquility. Many strategists see the economic recovery continuing and equities continuing to climb. They note that corporations are generally upbeat, continuing to ride the wave of positive earnings reports-more than 70% of the S&P 500 companies beat their earnings forecast for the third quarter of 2009.

Much of that, however, came from cost cutting, as just 30% of those companies beat top-line revenue expectations. That means the pressure is on to increase revenue for further gains in earnings and share prices in the future.

The cautious crowd notes that last year's historic influx of government support will subside in 2010 and markets will be forced to make gains on their own; so the progress may be slow at times.

That reduction in government help will reduceavailable spending on infrastructure and other products. Plus, the government's purchase program of mortgage-backed securities is scheduled to end on March 31, at which point it may even begin to sell those securities.

What's more, if the economy does improve in the first quarter, several market observers believe the Federal Reserve is likely to start raising interest rates by the second half of the year. "I think we'll see a solid start, but maybe a challenging second half in 2010," says Jeffrey Kleintop, chief market strategist for LPL Financial. "As the extraordinary global policy efforts that created a tailwind in 2009 begin to fade, or even translate into headwinds, it'll be a slowdown for the economy," he adds.

Kleintop believes that as the economy starts to weaken in the second half of the year, stock and bond markets will start to soften as well. And he is concerned about the Fed raising rates, a move he thinks will come by the second half of the year at the latest. "The financial system is still at the center of the crisis and the recovery. Raising the cost of funding for loans," Kleintop says, "might put pressure on banks before they're really ready to take it. That's the risk, but it'll be OK."

Jeffrey Saut, chief investment strategist at Raymond James, says that it will be more than just OK. He proudly notes that he predicted on March 2 that the markets were about to hit a bottom. And he still says that will remain the bottom. But he says the markets will "lose the sugar high of stimulus money." More government regulation and increased taxes will create headwinds for the stock markets. Still, Saut says, "It doesn't necessarily mean stocks have to go down, but it means it's more difficult for markets to rally."

Others are even more sanguine about 2010. ING Investment Management is more bullish than consensus, saying the widespread expectation for a tepid recovery is wrong. The group is overweight equities, saying they are still cheap. Uri Landesman, head of global growth, believes U.S. consumers have been underestimated, and will spend their way to a more robust economy. That will touch off a stock market rally that he estimates will bring the S&P 500 to between 1,250 and 1,275 by year end, a 13% increase from early December.

His colleague, Paul Zemsky, head of asset allocation and multi-manager investments, says because companies became so lean and mean during the downturn, even a small bump up in consumer spending will push up revenues tremendously. That, in turn, should keep earnings on the rise, which he believes will keep the stock market rally going. Zemsky likes cyclical sectors including technology, which he says will be spurred by pent-up demand from companies that did not upgrade during the recession.

Other picks include the consumer discretionary sector, as well as materials, which ING expects to ride the wave of higher commodity prices.

Zemsky also believes financials will be part of the rally, saying he considers the big banks to be historically cheap.

T. Rowe Price, in the cautiously upbeat camp, says that stocks are reasonably priced, even if they're not the bargains they were when the rally began in March. The company also says that stocks will beat bonds this year.

Brian Rogers, T. Rowe Price's chairman, chief investment officer and manager of the firm's flagship Equity Income Fund, thinks companies will post good earnings in 2010, reaping the benefits of sharp cost-cutting during the recession. He thinks they will return some of that money to shareholders in 2010 by beefing up dividends, or reinstating them if they were temporarily suspended over the past year.

Rogers says business confidence is picking up, and because most companies were not at the crux of the financial crisis, their balance sheets "generally are in good shape and we expect to see more capital investment as we head into 2010, and we think that will be a good thing for the markets." He believes the year's two big stories will be the continued quest for yield by investors, as they flock to dividend-paying stocks, and "the continued zeal to deal" as mergers and acquisitions activity, which began to emerge in 2009, continues.