The U.S. stock market ended a miserable year on a positive note but still closed out 2018 with its worst showing in a decade.
After setting a series of records through the late summer and early fall, major U.S. indexes fell sharply after early October, leaving them all in the red for the year on Monday.
The Dow Jones Industrial Average climbed 1.2 percent to close the year at 23,327.46 -- which meant a loss of 5.6 percent from 2017.
The broad-based S&P 500 advanced 0.9 percent in the session to 2,506.85, a loss of 6.2 percent for the year.
The tech-rich Nasdaq Composite Index advanced 0.8 percent to end at 6,635.28 a decline of 3.9 percent for 2018.
Ending in the red for 2018 did not appear in the cards in the first weeks of the year, when Wall Street repeatedly shot to new records on the heels of a sweeping tax cut signed into law in December 2017 by President Donald Trump.
But it did not take long for a host of worries to shake that confidence, from unease over an unpredictable series of trade wars launched by Trump, to angst over rising interest rates, to nervousness over economists' warnings of slowing growth, or worse, a possible recession.
And the declines rapidly accelerated in the final weeks of 2018, erasing all the gains since January.
Concluding the year with losses is "astonishing," Manulife senior portfolio manager Nate Thooft told AFP. "From an investor perspective, it probably shakes them a bit."
At the start of 2018, investor sentiment ranged somewhere between optimism and euphoria as the Dow surged above 25,000 for the first time and then hit 26,000 less than two weeks later.
But after that frothy start, stocks experienced their first cracks in late January, just ahead of a leadership transition at the Federal Reserve as Jerome Powell took over as Fed chairman, after Trump declined to nominate Janet Yellen for a second term.
Wall Street suffered an especially profound wobble on Powell's first day, Feb. 5, with the Dow plunging nearly 1,600 points at one stage before ending a grim session down more than four percent.
At the time, analysts cited worries the Fed would have to hike rates too aggressively.
But Trump's escalating trade wars and tariff threats soon took over as the main focus of investor concern. He announced the first salvo on March 1: tariffs on imported steel and aluminum. The following day on Twitter he proclaimed that "trade wars are good, and easy to win."
That has been followed by increasingly aggressive tariff moves against China.
Many key U.S. economic indicators stayed robust even as business leaders recoiled at Trump's rising protectionism, with unemployment lingering at a 49-year low, corporate earnings notching their strongest growth in eight years, and business and consumer sentiment remaining well above historic trends.
In August, the S&P 500 celebrated the longest-ever "bull market," with 3,453 straight sessions -- more than nine years -- without a drop of 20 percent. In October, the Dow surged to an all-time high of 26,828.39.
But it's been a rough ride ever since.
Besides worries over the difficult U.S.-China trade talks, much of current angst is focused on the Federal Reserve, which faces a tricky balancing act of boosting interest rates enough to contain inflation without choking off the economic expansion.
Market watchers are always nervous about Fed tightening cycles, especially as they reach their end, fearing they might overdo it, but Trump has dialed up the jitters with repeated attacks on Powell.
Economists warn that such criticism can easily backfire by compelling the US central bank to continue to raise interest rates to demonstrate its independence.
White House officials have denied Trump intends to fire Powell, but many market watchers say the possibility has further pressured stocks, especially given the president's penchant for setting policy by tweet without consulting his advisors.
A US government shutdown over Trump's desire to fund a wall along the border with Mexico will extend into 2019 also has dented sentiment, especially amid signs economic growth has peaked.
"To be clear, the challenges we see ahead don't look to us like the makings of another financial crisis," said a recent investor note by JPMorgan Private Bank said in a recent investor note.
"Our base case assumes slowing growth in the US economy throughout 2019 and a moderate recession in 2020."
Thooft of Manulife said the gloom of December feels "a bit overdone" given that most data is still strong.
But he warned that investors are unnerved, and the sense of waning optimism could soon show up in consumer and business sentiment indexes.
"You're going to need more than one (positive) outcome" to push stocks higher in 2019, he said. "It's probably bigger than just the trade issue."