Blue-chip stocks in the US limped to their first annual loss in three years last year, and opinion is divided over whether this year will be any better for Wall Street.
Some analysts see a cooling of economic growth as US consumers finally curb spending to shore up their finances. Others predict the kind of rally that, in the end, eluded US stocks in the year just over.
Having gained 29.3 percent over the previous two years, the blue-chip Dow Jones Industrials Average lost 0.6 percent over last year to close the year at 10,717.50.
A decline for the barometer of leading companies for last month sped up after Santa Claus failed to deliver his usual gift of a year-end rally and institutional investors cashed out what gains they had made for tax purposes.
But the tech-rich NASDAQ composite and broader Standard and Poor's 500 index finished 2005 with their third-straight yearly gains, albeit modest ones.
The NASDAQ climbed 1.4 percent over the year to 2,205.32, while the S&P 500 rose 3.0 percent to 1,248.29.
Wall Street's performance last year paled in comparison with its major overseas counterparts: the UK's FTSE 100 share index rose 17 percent, Germany's DAX 30 climbed 27 percent and Japan's NIKKEI 225 surged 40 percent.
Of the Dow's 30 components, 16 lost ground for the year, with troubled auto giant General Motors tumbling 51.5 percent -- hitting a 23-year low in the process -- to lead last year's losers.
For some, the Dow might have posted its first yearly loss since 2002 but that wasn't a bad result given the devastating hurricanes, record-high energy prices and fears over terrorism that buffeted markets last year.
"The market has shown great resiliency," said Eugene Peroni, head of equity research for Claymore Securities.
"Just the fact that the market has been able to hold in a trading range in this environment is bullish," said Peroni, who predicted the Dow will reach 13,000 in the next 18 to 24 months.
"This is a momentum market. Although this may conjure memories of the technology bubble, this environment is much richer in diverse sector opportunities. I believe the market action indicates economic activity with very good depth," Peroni said.
Other analysts are more cautious, arguing the stock market has still not worked off the excesses of the technology bubble of the late 1990s and that growth for the major indices will be linked to the economy and profits.
They pointed to the gloomy end to last year when many investors were spooked by a so-called inversion on the market for US Treasury bonds, as the interest yield on short-term notes began to outpace that on long-term bonds.
In the past, as in late 1999, an inverted yield curve has been a harbinger of a stock market slump and economic recession.
Paul Nolte, director of investments at Hinsdale Associates, said that in the wake of the biggest bull market in decades followed by a horrific bear market, stock values remain expensive by traditional measures.
"We went from being expensive 10 years ago to crazy expensive and now we're back to just expensive," said Nolte, who predicts the market could lose up to 10 percent this year.
Using Wall Street's measure of price-to-earnings (PE) ratios, the average stock is priced at around 15 to 16 times projected profits for this year, Nolte said.
But based on current earnings, the PE ratio is even higher at 18 to 19.