Wall Street enjoyed some solid gains on New Year’s Eve but the day of low-volume trading was certainly not enough to reverse the trend: 2018 was the worst year for U.S. stocks since 2008. That is notable considering that 2008 was the height of the financial crisis. The year looked promising for a bit but in the end uncertainty about everything from tariffs, interest rates, and shrinking profits suddenly moved stocks to sell territory.
The S&P 500 index ended 2018 with a loss of 6.2 percent while the Dow Jones Industrial Average decreased 5.6 percent and the Nasdaq composite narrowed 3.9 percent. Although things were already looking bad, December was the month when stocks really took a dive. The S&P 500, for example, suffered the worst December since the Great Depression. The United States was hardly alone as European markets also suffered steep losses.
“Investors got complacent,” Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, tells Reuters. “People were positioned for the lack of volatility, and when that changed because of trade concerns and interest rates, people started repositioning and that started the cascade.” At the end of the day, things weren’t that volatile in the markets, argues Bloomberg, but rather things have been so calm lately that it shook many investors. “This has really been a challenging year for investors,” said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management. “This was really the year that market volatility returned with a vengeance.”