Just over a month into 2026, U.S. stock markets have repeatedly staged the same scenario: a sharp intraday plunge, a loss of sentiment control, followed by a swift recovery before the close, often rebounding to higher levels.
According to tracking data from trading desks, Deutsche Bank highlighted in a recent report that since January alone, the S&P 500 has experienced at least five classic instances of "rapid decline followed by a swift rebound."
These fluctuations have frequently coincided with geopolitical tensions, tariff threats, tech stock anxieties, or AI competition narratives, yet they have almost universally failed to inflict substantial, lasting damage on the broader market.
Deutsche Bank suggests this is not coincidental but potentially a "new normal" taking shape for U.S. equities.
**Five 'False Alarms': Frequent Risk Events, Yet the Market Resists Deep Declines**
Deutsche Bank macro strategist Henry Allen outlined several representative rapid pullbacks observed since the start of 2026:
Mid-January saw an escalation in geopolitical risk: After hitting a new high on January 12th, the S&P 500 experienced an intraday drop of over 1% due to market concerns about potential U.S. involvement in Iranian affairs, coupled with political statements regarding Greenland. However, the panic quickly subsided, the day's losses narrowed significantly, and the index rebounded over the following two days.
Late January witnessed selling pressure triggered by tariff threats: The possibility of the U.S. imposing tariffs on certain European nations led to a single-day decline of over 2% for the S&P 500. Yet, as a framework for negotiations emerged, the index posted consecutive gains over the next two trading sessions, nearly erasing all losses.
Concerns over tech sector Capex surfaced at the end of January: Microsoft's earnings report revealed capital expenditures exceeding expectations, sparking worries about the return cycle for AI investments. This led to a significant sell-off in software stocks, dragging the broader market down by over 1.5% intraday. By the close, however, the index was only slightly lower, and the panic did not spread.
Early February brought a slump in precious metals impacting risk assets: A sharp correction in the precious metals market initially dragged S&P futures down nearly 1.5%. But U.S. stocks rebounded swiftly after the open, with the index not only turning positive but also ending the session just a step away from its all-time high.
The most recent case involved renewed turbulence in software and AI competition: Pressured by Anthropic's new AI tool, software stocks collectively weakened, causing the S&P 500 to fall as much as 1.64% intraday. Similar to previous episodes, a noticeable recovery occurred in the final trading hour, leaving the index with a loss of less than 1% at the close.
Deutsche Bank emphasized that during each decline, narratives quickly emerged questioning whether it was the start of a major correction. The outcome, however, has repeatedly demonstrated that while emotional noise is loud, the damage to the underlying trend is minimal.
**Why Don't Declines Persist? The Key Lies in Macroeconomics, Not News**
From Deutsche Bank's perspective, determining whether the stock market is entering a genuine, sustained downturn hinges not on the short-term shocks themselves, but on whether macroeconomic expectations undergo a "structural downward revision."
Historical experience shows that whether it was the 2022 bear market or the earlier dot-com bubble burst, each corresponded to a systemic deterioration in growth, policy, or financial conditions. The current environment is precisely the opposite:
The U.S. economy continues to exhibit high growth rates, with Q3 annualized growth reaching 4.4%, and the Atlanta Fed's GDPNow model for Q4 remains above 4%. The January ISM Manufacturing Index rose to its highest level since 2022. Eurozone Q4 economic growth exceeded expectations, with the PMI having been in expansion territory for a full year. German fiscal stimulus policies provide additional support for the European economy in 2026.
Against this backdrop, isolated risk events struggle to trigger a repricing of systemic risk. Deutsche Bank states plainly that as long as the macroeconomic fundamentals show no clear deterioration, the market is more inclined to view sharp sell-offs as "buyable volatility" rather than a signal of a trend reversal.
**An Emerging Market Behavior: Data Trumps Narrative**
Deutsche Bank's report puts forward a thought-provoking conclusion: the current market is assigning significantly greater weight to "real data" than to "news narratives."
The fact that nearly all major asset classes recorded gains in January itself indicates that risk appetite remains intact. Each instance of a sharp decline followed by a rapid recovery instead reinforces investors' path dependency—the strategy of buying the dip is being continually validated as effective.
This also explains why the frequency of market fluctuations is increasing, yet the amplitude of trend movements remains firmly suppressed.
Deutsche Bank does not deny the existence of risks but cautions investors to distinguish between "noise" and "signal." Only when growth expectations, policy paths, or financial conditions undergo a substantive reversal will U.S. stocks face a genuine trend-driven decline. Until then, the recurring pattern of "sharp drop-rebound" observed repeatedly in 2026 might well be the most accurate depiction of how U.S. stocks are operating in this phase. For now, at least, this appears more like a new normal rather than the calm before the storm.
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