What's knocked markets off course?

Just a few months ago, US financial markets seemed headed for a third year in a row of hefty increases.

But shares have tumbled since October, retreating to lower levels than at the start of the year.

That decline continued on Friday, as weak economic data in Europe and China sparked a late afternoon sell-off, sending all three major US share indexes lower.

The Nasdaq dropped almost 2.3%, the Dow fell 2% and the S&P 500 sank 1.9%.

For those invested in US stocks, the double-digit gains in seven of the last 10 years may still feel pretty good.

But as Wall Street debate turns to just when a recession might begin, many investors are bracing for a rough patch.

What's behind the shift in sentiment?

At their peaks this year, the Dow and S&P 500 were up about 8% since the start of 2018. The Nasdaq had increased 15%.

But the stock market surge was always a bit suspect.

It outpaced other economic measures by a large margin and was driven by the tech sector, which accounted for roughly half of the gains on the S&P 500 up until mid-August of this year.

Now some of the biggest winners - such as Apple and Facebook - have stumbled, dragging down the markets and making the weakness elsewhere more visible.

All three indexes are off 10% from their earlier peaks - a decline often considered a correction.

Until tech recovers, a broader market bounce is unlikely, said Terry Sandven, chief equity strategist at US Bank Wealth Management.

"Looking to 2019, volatility is likely to represent the norm rather than the exception," he says. "By many measures, the degree of investment difficulty is on the rise."

US central bankers have been raising interest rates since 2015, moving away from the unusually low rates put in place during the financial crisis as economic growth rebounds.

Analysts are worried about how much more expensive borrowing might get - and whether companies and households will be able to handle the increased costs.

Fears have been tempered recently by signals from the US Fed suggesting it may enact fewer rates rises in 2019 than previously expected.

But some still worry about the risks from corporate debt levels, which have hit historic highs - with an increasing percentage of the loans made to companies with already large debt loads.

US growth is expected to slow to 2.5% in 2019, down from about 3% this year, according to the IMF and Federal Reserve.

Some closely watched industries and financial indicators are already flashing warning signs of a more serious contraction.

In October, sales of existing homes had fallen more than 5% compared to 2017. Construction spending has started to slip and growth in consumer spending been less robust than expected.

Meanwhile, business optimism is in retreat.

Indeed, nearly half of US financial officers believe the nation's economy will enter a recession by the end of 2019, a recent Duke University survey found.

Investors loved US President Donald Trump's 2017 tax cuts. But his trade policy has them tied up in knots.

In March, Mr Trump ordered tariffs on foreign steel and aluminium, as well as on billions of dollars worth in annual trade from China. He's threatened more, including on foreign cars.

The tariffs have already raised costs for US companies - and economists warn they threaten to slow growth, adding to recession worries.

Markets aren't sure about White House strategy, and an ongoing investigation of Mr Trump's election campaign ties to Russia has only added to uncertainty emanating from Washington.

"If these investigations produce some sort of smoking gun that throws us into a constitutional crisis, that might prove destabilising," says Mark Vitner, senior economist at Wells Fargo Securities.

The IMF expects the global economy to expand 3.7% in 2019, but the growth has become more uneven.

The US Federal Reserve recently flagged issues in Europe, China and emerging markets as some of the biggest threats to the American economy, with Brexit high on the list.

Indeed, as much as US indexes are down, financial markets elsewhere have dropped even farther.

The Global Dow is down around nearly 9% so far this year, and the MSCI world index is down about 8%.

In Asia, Japan's Nikkei 225 index has fallen about 6%; Hong Kong's Hang Seng index is about 13% lower in 2018. The Shanghai Composite has dropped more than 20%.

The Stoxx Europe 600 is off almost 11%. France's CAC 40 has dropped almost 9%, London's FTSE 100 has declined nearly 11%. and Germany's DAX is down more than 15%.

So stormy seas likely lie ahead.