Why the stocks dropped in 2018? The main cause was the Fed tightening into a slowing economy. Powell said on Oct 3 that rates were "a long way from neutral", the 10-year yield jumped to about 3.2%, and quantitative tightening was running at $50bn a month, which he later described as being on "autopilot". The trade war added to the pressure: tariffs on $200bn of Chinese goods, a threat to raise them to 25%, and on Dec 1 the arrest of Huawei's CFO, which undercut the G20 truce. Meanwhile earnings growth and global PMIs were peaking as the effect of the 2017 tax cut faded, so the market started pricing a late-cycle policy mistake. December made it worse: the Dec 19 hike came without a dovish signal, the government shut down on Dec 22, and Mnuchin's Dec 23 liquidity call to the banks spooked investors, taking the index down about 19.8% from the Sep 20 peak to the Dec 24 low. The recovery began with Powell's pivot to "patient" on Jan 4, 2019.