Markets are in for a bumpy ride in the coming weeks, roiling on the words of politicians who will both raise and dash hopes that the economy will avoid a fiscal cliff and recession next year, said Russ Koesterich, chief investment strategist at BlackRock Inc.

At the end of this year, the Bush-era tax cuts and other benefits are set to expire at the same time automatic cuts to government spending kick in, a combination known as a fiscal cliff that could push the country into a recession next year if left unchecked by Congress.

Democratic and Republican lawmakers are working to agree on tax and spending reforms to avoid the cliff.

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Some have suggested confidence they will strike a deal, while others have said New Year’s Day will come and go without a deal and force policymakers to deal with the issue in early 2013.

While taxes and spending cuts won’t fully kick in Jan. 2, 2013, uncertainty alone could rattle markets until policymakers strike an accord.

“Until we get much closer to a deal, we’re going to see more volatility in the markets,” said Koesterich, according to The Wall Street Journal.

“We’re going to be hostage to these utterances out of D.C.”

Other money managers are warning not to breathe a sigh of relief when markets gain in the coming weeks, especially if the European debt crisis rekindles anew and stokes fears of a global cool down, though look for buying opportunities amid sell-offs.

“As a money manager, you don’t know where the bottom of the market is, but I don’t want to miss the boat if the market goes higher from here,” said Reed Choate, a portfolio manager at Neville, Rodie & Shaw, a New York firm with $1.2 billion under management, The Journal added.

Goldman Sachs analysts warn that investors can expect the Standard & Poor’s 500 to drop 8 percent by the end of this year due to fiscal cliff uncertainties.

The selloff would come fresh in the heels of a 7 percent decline posted since September.

“Uncertainty swirling around the fiscal cliff that must be resolved by year-end, the pending jump in capital gains taxes at the start of 2013 and the debt ceiling that will be reached in late February, represent clear and present downside risks to the market in the near-term,” Goldman Sachs analysts wrote in a note, CNBC reported.

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