Stock storyline shifts from ‘worst start to year’ to not too bad

March 08 05:23 2016

The worst start to a year ever for the U.S. stock market doesn’t seem so bad now, following a bounce-back rally that has pulled stocks close to 2% of where they began the year. The market has had a remarkable turn since bottoming out in early February, slashing the year-to-date loss to 2.2%, as of Friday’s close, from an anxiety-inducing 10.5% at its low1215-stock-market_full_600

Three weeks ago on Feb. 11, fear was in the air after investors had watched the Dow Jones industrial average lose nearly 1,800 points for the year when it closed at 15,660 that day. But then the tide turned bullish. That same day, JPMorgan Chase CEO Jamie Dimon delivered a vote of confidence to his bank’s battered shares and the stock market in general when he used his own cash to buy 500,000 shares of stock in the bank he leads. Since then, the market hasn’t looked back.

Most of the fears and worse-case scenarios that weighed on stocks earlier in 2016 never materialized. The relief rally has lifted the Dow nearly 1,350 points from its low. Last week, the blue-chip barometer scored its first four-day winning streak of the year, closed above 17,000 for the first time since Jan. 6 and ended within striking distance of being break-even for the year.

A spate of fresh headlines and economic data points has debunked the notion — at least for now — that the financial world was heading for another monumental fall on par with the 2008 financial crisis or 2000 Internet stock meltdown. It’s not as if all that ails the stock market has been cured, but more a case of investors now downsizing the odds of apocalyptic outcomes.

“The rally has been more about the fading of negatives rather than the emergence of positives,” says Bob Doll, chief equity strategist at Nuveen Asset Management. The early-year stock swoon, Doll says, was caused by “unfounded concerns about a U.S. recession, deflation and bad energy loans, overly negative views on China’s economy and fears the Federal Reserve would raise rates five times.” But none of those major fears materialized and are currently on the “back burner,” Doll says.