Widespread market jitters include Federal Reserve policy, a prolonged trade fight with China, and political polarization in Washington that's partly shut down the U.S. government. As of Friday, Almost 68 percent of the S&P was trading at bear market levels, or 342 out of 505 stocks, according to data compiled by CNBC.
In spite of that backdrop, not a single major bank strategist is forecasting a downturn next year, according to a snapshot of the forecasts of every big Wall Street firm.
All of which raises the question: Why so optimistic? A hint of the reason why could be found in Bank of America's 2019 outlook.
"The bear market vibe at the end of 2018 is expected to continue, with asset prices finding their lows in the first half of the 2019 once rate expectations peak and global earnings expectations trough," the bank wrote earlier this month.
"However, BofA Merrill Lynch also forecasts a record high peak in earnings for the S&P 500 next year and plenty of upside potential for investors who make volatility their new best friend."
In fact, a number of analysts expect the U.S. economy to continue its expansion, and by extension stocks should benefit. In a research note over the weekend, Goldman Sachs declared that the U.S. economic glass was "half full," pointing to pessimism that was overshadowing encouraging fundamentals.
"Although U.S. growth has started to moderate from the exceptionally strong pace earlier this year, momentum remains solid," with the U.S. economy expected to grow by 2.7 percent in the current quarter.
"Moreover, there are still a number of positives that risk getting lost in the gloom, such as a relatively high personal saving rate, a sizable private sector financial surplus, and strong real income growth on the back of rising wage growth and lower oil prices," the bank added.
So even with markets roiled by interest rate fears and a still percolating U.S-China trade war, analysts expect earnings will support their rosy forecasts. BofA-Merrill Lynch sees slower earnings growth, but expects the S&P 500 to peak above 3,000 next year.
"In our view, the current weakness in the markets is not a reflection of poor fundamentals. Rather, it's caused by a confluence of idiosyncratic shocks that create very real risks for investors to be concerned about but also opportunities for vigilant, well-positioned investors to pursue," said Candace Browning, head of BofA Merrill Lynch Global Research.