LOS ANGELES -- Financial markets' Year of Misery has finally ended, leaving investors worldwide to lick their wounds -- and to hope they can avoid a repeat in 1995.


In the U.S. stock market, the Dow Jones industrial average ended the year at 3,834.44, or 80.35 points above 1993's close, for a 2.1 percent gain.


But that was where the good news ended on Wall Street. Every other major U.S. stock index declined in price for the year, with most losing between 1.5 percent and 6 percent. Most major foreign markets performed even worse in local currencies.


All in all, stocks posted their worst year, and first losses, since 1990.


The nominal culprit, of course, was the surge in interest rates worldwide: The U.S. Federal Reserve Board boosted short-term rates by a dramatic 2.5 percentage points in 1994, ostensibly to keep the robust U.S. economy from overheating.


In the process interest rates jumped across the board, producing some of the worst 12-month paper losses for global bond investors in this century.


As the market yield on 30-year U.S. Treasury bonds soared from 6.35 percent at the start of the year to 7.88 percent on Dec. 30, the value of that bond (if purchased a year ago) slumped 17 percent.


But given the magnitude of the rise in interest rates, some Wall Streeters say the real surprise is that the U.S. stock market didn't collapse outright after hitting record highs early in the year.


Indeed, with the blue-chip Standard & Poor's 500-stock index off a mere 1.5 percent in price for the year, "the damage has been so minor that it doesn't really qualify as a bear market at this point," admits an otherwise bearish James Stack, publisher of the InvesTech market newsletter in Whitefish, Montana.


Even during the depths of the market's sell-off last spring, major U.S. stock indexes dropped only about 10 percent from their all-time highs. That is typical of a market "correction" -- a short-term pause in a bull market -- as opposed to a bear market, in which broad indexes usually decline 20 percent or more.


What is more, bullish analysts point out that it was possible to make money in stocks in 1994: Many issues responded well to their companies' strong underlying earnings growth, despite higher interest rates. Hot industries included shoemaking, technology, aluminum and medical supplies.


Still, world stock markets were buffeted by so many crosscurrents and contradictions in 1994 that it is hardly surprising if the average investor feels worse than the broad market indexes would imply:


?Market volatility, as measured by the percentage difference between the S&P 500 index's high and low values for the entire year, was just under 10 percent -- the second lowest on record, after 1993.


Yet Abby Cohen, investment strategist at Goldman Sachs & Co., calculates nearly 40 percent of all actively traded stocks had declined more than 30 percent from 1994 highs by Nov. 30. For those issues, the bear market was real.


?Investors who diversified internationally, believing that stock market returns worldwide generally didn't correlate -- that is, that other markets would zig if the U.S. zagged -- found that premise to be mostly false in 1994.


Japanese stocks were the only winners among major markets, as they rallied out of their four-year bear market. In Europe and most Third World markets, stocks declined sharply as interest rates rose, though a weak dollar for much of the year made some foreign markets' performance appear better to U.S. investors.


?Classic "defensive" issues -- stocks that investors normally turn to for protection in times of turmoil -- were among the year's biggest losers. The Dow utility-stock index, for example, plummeted 20.8 percent for the year, victim of rising interest rates and industry-specific problems.


With so much anguish in markets -- and with no end in sight to high short-term interest rates that are drawing a tidal wave of cash away from stocks -- it is little wonder that so many Wall Street pros are bearish, analysts say.


Fully 50 percent of the market newsletter writers polled regularly by Investors Intelligence, of New Rochelle, New York, now say they are bearish. Only 35 percent are bullish. The rest see this market in a short-term correction. The most prevalent forecast is for another slump in stock prices early in 1995, as the Fed tightens credit further to restrain the economy.