NEW YORK, Jan. 6-- Tumbling crude prices came back to haunt Wall Street again at the beginning of 2015, with major averages having their worst start of a year since the 2008 financial crisis.

Although U.S. equity markets missed the so-called "January Effect" this January, a month when stocks historically tend to be bullish with an influx of new money coming in, most traders remain optimistic on U.S. equities and believe that the oil-spurred sell-off would be short-lived.@ "I don't think there is anything that suggests the entire landscape will be corrupted by the change in oil prices," Gordon Charlop, managing director at Rosenblatt Securities in New York, told Xinhua on Tuesday. "So I think that essentially we are in a spot where you still will find relative value in U.S. equities," he added.

OIL BEING THE PRIMARY CAUSE

Having scored the sixth consecutive year of gains in 2014, U.S. stocks kicked off 2015 with broad-based selloff.

The S&P 500 posted its biggest drop since early October on Monday, and then extended its losing streak into a fifth straight day on Tuesday.

The weakness in stocks came in tandem with continuously diving oil prices. U.S. crude for February delivery fell 4.2 percent on Tuesday to settle a nearly six-year low of 47.93 dollars a barrel, a day after it dipped below the psychologically important level of 50 dollars for the first time since April 2009.

U.S. crude price has tumbled 55 percent since its latest peak of 107.26 dollars a barrel in June on concerns of global supply glut and lackluster demand. What's spooked investors is that the slump has yet not shown any sign of bottoming out, with some analysts even betting on oil dipping to as low as 20 dollars a barrel.

The drop of crude prices "are getting emboldened," said Charlop, "it sure spilled over to the equity market."

Echoing his view, Jason Weisberg, managing director at Seaport Securities, told Xinhua that "the uncertainty that's coming with the slide in oil is spilling over to the equity market."

"Historically, they (crude and equities) used to trade inversely with each other, now it looks like they are trading parallel with each other," Weisberg said. "But I think the long-term fear is that this will lead to deflation ... That's the fear that will derail the U.S. economy."

Besides oil, stocks' sharp decline was also attributable to political turmoil in Greece ahead of its snap elections later this month, uncertainty on whether the European Central Bank will expand easing measures to stimulate the economy, profit-taking after U.S. stocks' record rally last year, and expectations of a rate hike from the Federal Reserve later this year.

EQUITY SELLOFF TO BE SHORT-LIVED

The sharp selling of stocks early this year was expected by many traders, as major stocks' move to all-time highs at the end of 2014 appeared "exaggerated" on low volume and lack of participation, said Kenneth Polcari, director of the NYSE floor division at O'Neil Securities.

"Now it's just kind of repricing based on fair value. I don't see any sense of panic," Polcari said.

The Chicago Board Options Exchange's Volatility Index, often referred to as Wall Street's fear gauge, jumped 6 percent to 21.12 percent on Tuesday, still far below 30 percent, which is commonly seen as the panic level.

Traders also believe that the current selloff would be temporary, similar to a roughly 5-percent correction at the beginning of 2014 when investors took profits following some 30-percent annual gains of stocks in 2013. Helped by solid fundamentals, U.S. stocks soon recovered all early-2014 losses.

"We are looking at almost identical trading pattern that we saw last January," said Weisberg.

"The only difference between this January and last January was the precipitous selloff in crude. But other than that, if last year is an indication of things to come, I would buy the selloff in long term," he said.

Weisberg said the selloff will probably end by the end of the month or in early February.

WALL STREET EYING 7TH YEAR OF BULL

Despite the weak start, many investors still believe U.S. stocks are likely to extend their bull run into a seventh consecutive year in 2015, supported by the improving U.S. economy and increasing corporate earnings.

The U.S. economy in the third quarter increased at an annual rate of 5 percent, marking its fastest growth pace in more than a decade and surprising the market.

If the December U.S. nonfarm payrolls report due on Friday could beat expectations, U.S. stocks will get a major boost to bounce off the current lows. The world largest economy had a surprisingly good jobs report for November, with 321,000 new jobs added and unemployment rates head steady at a six-year low of 5.8 percent.

Investors are also waiting for the fourth-quarter earnings season of U.S. companies, which will start next week with quarterly results from aluminum giant Alcoa and major U.S. banks.

Lower oil price is a double-edged sword. On the positive side, it is in some way a tax cut for U.S. consumers to have more discretionary income to spend, which will eventually turn out good for the U.S. economy. On the negative side, lower oil prices would hurt energy and energy-related companies' profits.

"Obviously, oil stocks have been affected by it. But it's been more than that," Charlop said. "If oil went down, it's good for the transportation index because it's much cheaper to get around in terms of fuel costs."

Signs of consumer euphoria resulted from lower oil prices have shown. A string of major U.S. auto makers posted strong December sales result on Monday. General Motors' total December sales in the U.S. registered 274,483 vehicles, up 19 percent from a year ago, representing its best December sales in seven years.

In Weisberg's opinion, "it's all cyclical," as the drop of energy companies' share prices came after several years of major profits.

"It's okay for oil to go back a little, as long as the gains are going somewhere else," he said. "For a sustainable market, you need a healthy sector rotation."

Weisberg pointed out that the sector rotation this year could see money coming out of oil and energy sectors into the consumer discretionary sector.

Weisberg believes Wall Street will close the year on the highs supported by companies' higher profit margins due to lower petroleum prices. He provided optimistic year-end targets for U.S. stocks, saying the blue-chip Dow could close 2015 near 19,200 points and the S&P 500 between 2,275 points and 2,300 points.

Charlop said he is a tad less bullish at this point than he was last year, but generally he thinks good economic conditions, a still friendly Fed and healthy companies that are generating earnings and giving dividends will support stocks' move to the upside.

But traders also cautioned that investors should watch volatility to pick up a little bit this year.