On the first trading day of 2008, the Dow Jones industrial average closed down 1.7 percent—the worst start to a year since 1983. (Still, 1983 was a good year for the Dow: It ended the year up more than 20 percent.)

In terms of points, today's 220.86-point decline was the worst start for the Dow ever.

The Standard & Poor's 500-stock index fell 1.4 percent today, while the Nasdaq composite index declined 1.6 percent.

The sell-off was prompted by surprising weakness in a survey of manufacturing activity and a rise in crude-oil prices, which just barely touched $100 a barrel.
 
The weak start came after the markets eked out small gains for 2007: The Dow ended up 6.4 percent for 2007, while the S&P 500 was up 3.5 percent.

The long-running bull market looks increasingly endangered. If the economy sinks into a recession, then a bear market—a decline of 20 percent or more from the market's previous high—is virtually a certainty.

"Recession is probably more likely than not in 2008," David Chalupnik and Keith Hembre of First American warned clients as the year ended, according to the Wall Street Journal. Stock indexes fell sharply before rebounding later in the year to put the S&P 500 up 5.6 percent for 2008, the Journal says.

"There are even odds of a recession," Mark Zandi, chief economist at Moody's Economy.com, told the New York Times. "It literally could go either way."

In a sign that Wall Street analysts are turning bearish, Reuters reports that forecasts for fourth-quarter earnings by companies in the S&P 500 are now calling for a decline of 6.1 percent, compared with a projected 11.5 percent increase as of October 1.

It is the biggest shift in profit projections since Reuters Estimates started compiling analysts' forecasts in 1999.

And the first two quarters of this year won't be much better. Analysts now expect first- and second-quarter earnings to rise just 5.1 percent and 5 percent, respectively, said Ashwani Kaul, senior market analyst at Reuters Estimates.

Nouriel Roubini notes on his blog that sectors including financials, homebuilders, and retailers were hammered last year. "The next shoe to drop will be all the other cyclical sectors of the economy that will seriously suffer from the forthcoming recession. So while 2007 was lousy for the U.S. market, 2008 may end up being much worse," he wrote.