A new normal for the US stock market? Only a few weeks into 2026, and there

Little more than a month has passed since the start of 2026, yet the US stock market has repeatedly witnessed the same scenario: sharp intraday declines, loss of emotional control, but rapid recovery before the close, even returning to highs.

According to TradingView, Deutsche Bank noted in its latest report that since January alone,$S&P 500 Index (.SPX.US)$there have been at least five typical cases of ‘rapid declines followed by swift rebounds.’

These fluctuations are often accompanied by geopolitical tensions, tariff threats, tech-sector panic, or narratives around AI competition, but none have caused substantial or sustained damage to the broader market.

In Deutsche Bank’s view, this is not a coincidence but may represent a new ‘normal’ currently taking shape in the US equity market.

Five ‘false alarms’: frequent risk events, but the market refuses to fall deeply.

Deutsche Bank macro strategist Henry Allen reviewed several representative rapid pullbacks since the beginning of 2026:

• Mid-January saw heightened geopolitical risks: after the S&P 500 hit a new high on January 12, concerns over the possibility of the US intervening in Iran, coupled with political statements regarding Greenland, caused the index to drop more than 1% intraday. However, panic quickly dissipated, narrowing losses significantly, and the index rebounded over the following two days.

• Late January witnessed a sell-off triggered by tariff threats: the possibility of the US imposing tariffs on some European countries led to a single-day plunge of over 2% in the S&P 500. However, as negotiation frameworks emerged, the index rebounded for two consecutive trading days, almost fully recovering its losses.

• End of January brought worries over tech-sector Capex: Microsoft’s earnings report showed higher-than-expected capital expenditures, raising market concerns about the return-on-investment cycle for AI. The software sector suffered heavy losses, dragging the broader market down by more than 1.5% intraday. By the close, however, the index had only slightly declined, and panic did not spread.

• Early February saw a precious metals crash impacting risk assets: a significant correction in the precious metals market once dragged S&P futures down nearly 1.5%. However, the US stock market rebounded quickly after opening, and the index not only turned positive but also came within striking distance of its all-time high.

• A fresh wave of competition between software and AI has emerged: influenced by Anthropic’s new AI tool, software stocks collectively faced pressure, with the S&P 500 experiencing an intraday drop of up to 1.64%. However, as seen previously, a notable recovery occurred in the final trading hour, ultimately limiting the decline to less than 1%.

Deutsche Bank emphasized that during every downturn, the market quickly generates narratives questioning whether it marks the beginning of a major correction. However, repeated outcomes have shown that emotional noise is loud, but the underlying trend remains minimally disrupted.

Why does the market resist further declines? The key lies not in the news itself, but in macroeconomic factors.

In Deutsche Bank’s view, determining whether the stock market will enter a genuine and sustained downturn hinges not on short-term shocks but on whether macroeconomic expectations undergo a ‘structural downgrade.’

Historical experience shows that both the 2022 bear market and the earlier dot-com bubble burst corresponded to systemic deteriorations in growth, policy, or financial conditions. In contrast, the current environment is quite the opposite:

• The U.S. economy continues to maintain high growth rates, with an annualized growth rate of 4.4% in Q3. The Atlanta Fed’s GDPNow forecast for Q4 remains above 4%.

• The ISM Manufacturing Index in January rose to its highest level since 2022.

• Eurozone economic growth in Q4 exceeded expectations, with the PMI remaining in expansion territory for a full year.

• Germany’s fiscal stimulus policies provide additional support for the European economy in 2026.

Against this backdrop, individual risk events are unlikely to trigger systemic risk repricing. Deutsche Bank explicitly stated that, as long as there is no significant deterioration in macroeconomic fundamentals, markets tend to view sharp declines as ‘buyable volatility’ rather than signals of a trend reversal.

An emerging market behavior: data outweighs narratives

Deutsche Bank presented an intriguing conclusion in its report: the weight given by the current market to ‘real data’ is significantly surpassing that attributed to ‘news narratives’.

The fact that nearly all major asset classes recorded gains in January alone suggests that risk appetite remains intact. Every rapid recovery following a sharp decline further reinforces investors’ reliance on a familiar strategy—buying the dip continues to prove effective.

This also explains why, despite the increasing frequency of market fluctuations, the amplitude of trend movements has been firmly contained.

Deutsche Bank did not deny the existence of risks but reminded investors to distinguish between ‘noise’ and ‘signals.’ Only when growth expectations, policy directions, or financial conditions experience a material reversal will the US stock market face a genuinely trend-driven downturn. Until then, the recurring pattern of ‘sharp declines followed by rebounds’ seen repeatedly since 2026 may very well be the most accurate depiction of how the US equity market operates during this phase. At least for now, this appears more like a new normal rather than the calm before the storm.

Editor/Melody