LAST week, the "Santa Claus" rally that carried major US stock indexes to records continued, but gains were unevenly distributed as traders adjusted their positions.
Nations and industries that were weighed down by energy costs will see growth accelerate, while the abrupt end of an oil bonanza is sure to leave some sectors and countries in crisis. The overarching question for the stockmarket outlook is whether the impact of lower oil prices on the global economy in general, on the US economy in particular, and on the financial system is positive or negative.
Oil prices neared their lowest level since the pits of the recession, finishing the week below US$55 a barrel in New York trading.
Most economists and bankers see the net effect on the global economy as a positive. In a December speech, Dallas Federal Reserve president Richard Fisher said that oil exporters such as Mexico, which had taken the opportunity to diversify their economies when interest rates were low and oil prices were high, should continue to thrive. Those exporters, such as Brazil and Russia, which put all their eggs in the commodities basket, will certainly feel the effects, Mr Fisher said.
One of the most negative factors for global growth this year was the sputtering of the Chinese economic juggernaut. For years, analysts had wondered at the consistently sky-high growth of China. In a relatively short period in world historical terms, the world's most populous nation had gone from a closed communist society to a bustling marketplace that many economists predicted would soon eclipse the US as the world's economic leader.
In 2014, however, a new Chinese government repeatedly tried to rein in growth in areas where the decades of growth had led to speculative excess, particularly in the real estate markets. While industrial production still advanced at an enviable pace, it failed to match the prodigious rates to which China watchers have become accustomed.
China is one of the world's largest oil importers and the drop in prices could inspire a return to its former economic glory.
In the US, the calculus is more complex. The oil industry was, in large part, the engine that drove the unemployment rate lower in the last five years, said Oliver Pursche, president of money manager Gary Goldberg Financial Services.
Other strategists argue that the negative effect on jobs and capital investment will be more than offset by the impact on household finances in the US. Fuel prices in many areas have fallen by more than one third, and that has almost immediately translated into higher retail sales.
Analysts at brokerage Morgan Stanley said in a research note: "This gasoline-fed fire should keep personal consumption spending expanding at a 31/4 per cent pace in this and the next quarter and is in line with our outlook that 2015 shapes up to be the strongest year for household spending since 2006."
All evidence points to a boost from the gas-price retreat on sales during the holiday-shopping season. There was one unfortunate twist for conventional retailers, however.
After years of buying some gifts online and others at malls, many US consumers appear to have spurned malls altogether. Amazon.com said that it received about twice as many orders through its mobile app as last year, growth that almost certainly came at the expense of mall-based retailers. United Parcel Service attributed an anticipated rise in returns this year to the fact that more Americans are shopping online where it's harder to make a final judgement on a product's suitability.
Americans still spend billions of dollars at Walmart and competing stores. But the retail business has become cut-throat and marquee stores such as Sears have been brought to their knees.
Drillers such as Continental Resources, which is active in the Bakken Shale in North Dakota, are cutting budgets and losing share value because of the high cost of production in those fields. One Texas oilman said that many of his contacts in North Dakota are planning to drastically reduce their drilling activity.
Even as rigs are idled, however, production on the Bakken fields and in Eagle Ford in South Texas remains prolific. That's because of thousands of wells about to come on line that were drilled when the price was at US$100 a barrel or more and the rig count was near a record high, said the Texas oilman.
To make matters worse for stressed domestic drillers, the price of natural gas is wallowing at a two-year low, hurt by mid-winter temperatures across most of the US that are bordering on the balmy. This December is one of the warmest in 50 years. Natural-gas prices are down 33 per cent since their November highs, with little relief in sight given forecasts of more warm weather.
Risks of a financial crisis triggered by defaults by oil-exporting nations or domestic producers that finance operations with junk bonds are still an issue, according to some analysts.
The oil price plunge is likely to change the behaviour of stock investors, too, said analysts at brokerage Goldman Sachs in a research note. After years of steadily growing earnings and rising "price-to-earnings" ratios, earnings growth in many industries could pick up dramatically because of dropping energy costs while the ratios used to value stocks could flatten out.
All in all, most strategists see a strong finish to the year for the stock market, excluding the energy sector, and a positive start to 2015.