Brace for worst year on Wall Street since 2008

bear stocks markets

It's shaping up to be the crummiest year for U.S. stocks since the implosion of Lehman Brothers.

The bull market on Wall Street has run into a wall of alarming news: turbulence in China, vague Federal Reserve policy, a crash in oil prices, and a slowdown in earnings growth.

Those shockwaves have wiped out 6% of the value from the S&P 500 so far this year.

Here's the good news: investment professionals polled by CNNMoney believe a year-end Santa Claus rally will lift stocks off the mat and prevent a bear market from materializing. On average, survey respondents estimate the S&P 500 will end the year at 2015, up 3% from Friday's close.

The bad news is that the market would still finish the year 2% below where it started. That would make 2015 the worst year for the S&P 500 since 2008 -- when it plunged 38% amid the financial crisis.

"Right now you've got a lot of pessimism driving prices. This is going to be a very uninspiring year for U.S. stocks," said Russ Koesterich, global chief investment strategist at BlackRock.

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Related: Doom and gloom is all the rage on Wall Street. Time to buy?

Big banks grow more bearish

Market strategists at big Wall Street banks (which were not part of the CNNMoney survey), are a bit more optimistic.

Deutsche Bank, for example, is still calling for the S&P 500 to pop and rally 8% by New Year's Eve.

But these big banks have been dimming their year-end targets too. Last week, Goldman Sachs lowered its S&P 500 target to 2000 from 2100 due to slower growth forecasts in the U.S. and China and the negative outlook for oil.

Related: The stock market bull may not be dead yet

China is the biggest concern

China was the No. 1 concern among the strategists CNNMoney polled. The fear continues to be that China's troubles will drag the rest of the world into a severe slowdown or even recession.

There are already signs of weakness at home. The U.S. only added 142,000 jobs in September and the number of jobs created in the prior two months was downgraded.

Just last month, at least one large U.S. company -- Caterpillar (CAT) -- cited the global slowdown as it announced 10,000 job cuts would be made over the next few years.

Weak global activity and the strong U.S. dollar caused American manufacturing growth to grind to its weakest pace in two years, during September.

Related: Setback city: U.S. adds only 142K jobs

Sluggish earnings growth

None of that is good for corporate profits, which power stock prices.

David Lafferty, chief market strategist for Natixis Global Asset Management, believes modest earnings growth and record-high profit margins will keep a lid on stocks.

"We see no major downside to stocks, but only modest upside as well," Lafferty said.

Are stocks still too expensive?

A number of market strategists are worried about valuations too. Few believe stocks look as expensive as during market bubbles, but it's also tough to argue they're cheap.

"Valuations remain stretched -- even at current prices," said Peter Kenny, an independent market strategist and founder of Kenny's Commentary.

Fears about lofty valuations caused biotech stocks to tumble in recent months. The previous darling of the stock market tumbled into a bear market last week amid fears that political pressure will keep a lid on drug prices.

At the same time, investors continue to grapple with a murky picture from the Fed on the timing of higher interest rates. Wall Street reacted negatively to the Fed's decision to delay a rate hike in September and this week's ugly jobs report seems to have lowered the odds for a move later this year.

Related: Third quarter was brutal. But these stocks won

Bet on consumers, innovation

None of this means bargains can't be had in the stock market. A number of market pros remain bullish on consumer discretionary stocks as part of a bet that cheap oil will be a net positive for Americans.

Tech stocks also remain a favorite. No wonder the Nasdaq -- home to tech stars like Apple (AAPL, Tech30), Google (GOOG) and Facebook (FB, Tech30) -- is down just 1% this year.

"We are most bullish on the technology sector. It offers solid earnings and revenue growth. In addition, valuations are relatively reasonable," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors.

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