Shares closed the door on a dire 2002 on Tuesday, leaving exchanges deep under water for the third year in a row - a hat-trick unseen since the immediate aftermath of the second World War - as a jittery 2003 beckons.
The likelihood of another war, this time in Iraq, will dampen investor sentiment going into the new year, analysts and fund managers said, but ruled out for now a fourth straight year of losses, an event last seen in the Depression- era 1930s.
"It will be a year of two halves in 2003, with a Gulf war in the first half dictating market direction, which will be south. For the second half we are keeping an open mind, but we are not writing off the whole year for Europe yet," said Mr Clive McDonnell, European strategist at Standard & Poor's.
The Dow Jones Industrial Average rose 8.78 points to end the year at 8,341.63, after falling more than 1 per cent earlier in the session in very light volume.
The broader Standard & Poor's 500 Index ended up 0.43 of a point, or 0.05 per cent, while the technology-laced Nasdaq Composite Index slipped 4.03 points, or 0.30 per cent.
The year closed with the worst December performance by the blue-chip Dow Jones industrial average since 1931 and confirmed the first three-year losing streak by Wall Street since 1939-41.
The S&P 500 finished 2002 with a loss of about 23 per cent for the year, while the Nasdaq closed down about 32 per cent. The Dow is off about 17 per cent for the year, its worst decline since 1977.
The US market has lost a whopping $2.8 trillion (€2.7 trillion) of value this year, measured by the Wilshire 5000 Total Market Index as of Tuesday's close.
In Europe, the FTSE Eurotop 300 index closed Tuesday up 0.7 per cent at just over 857 points, but down 32 per cent for the year. It fell 0.7 per cent in 2000 when the record bull run ended, and a further 17.5 per cent in 2001 after the September 11th attacks and as accounting scandals like Enron began to surface.
The narrower DJ Euro Stoxx 50 index of euro-zone blue chips ended 2002 down 37 per cent, its third year of losses.
The British FTSE 100 and the French CAC-40 shed 24.5 per cent and 34 per cent respectively for the year, the worst ever annual falls in the two indices' history.
Volatility and uncertainty, hallmarks of the past year, are set to continue going into 2003.
"The problem is in the first quarter you have everything going wrong, with war or geopolitical risk, and you have results for the fourth quarter of this year, so it will be difficult for people to talk in an upbeat manner," said Mr Gary Dugan, global strategist at JP Morgan Fleming Asset Management.
This time last year, economists were predicting a robust rebound in the economy with corresponding improvements in corporate earnings, only to be proved wrong.
US consumer confidence suffered a surprise slump in December as weak job prospects soured spirits, compounding the gloomy picture for retailers in the key holiday shopping season, a report said on Tuesday.
The Consumer Confidence Index dropped to 80.3 in December from a revised 84.9 in November, the Conference Board, a private business research group, said.
That was far below analysts' forecasts for an improvement to 85.5.
The index has declined for six of the past seven months, and the decline in December took the index back near the nine-year low plumbed in October of 79.6.
"The consumer has held up well despite some pretty disappointing consumer confidence numbers over the past year, but it's unlikely that they'll pick up the pace," said Mr Charles Payne, market analyst at Wall Street Strategies.
"The consumer has to be pooped at this point. You just have to wonder how many colour TVs and DVDs each household can hold." - (Reuters)
