Wall Street ponders if rebound is for real

A strong rally that lifted Wall Street from last week's multiyear lows has investors pondering whether the worst is now over for the stock market battered by its worst bear market in decades.
Some analysts say the savage selloffs over the past weeks have effectively established a "bottom" for the stock indexes, although others say a rebound will be hard to maintain with confidence weak and recession likely.
The Dow Jones Industrial Average rose 4.74 percent in the week to Friday to end at 8,852.22, coming back from its worst week in history that produced a dizzying 18 percent drop.
The broad-market Standard & Poor's 500 index gained 4.60 percent to 940.55 after its 18.2 percent slide in the prior week.
The technology-heavy Nasdaq composite posted a 3.74 percent weekly gain to 1,711.29.
Bob Dickey, analyst at RBC Dain Rauscher, said the roller-coaster action in recent sessions has in fact established a floor for the market.
The market's bounce off its lows "was the most convincing bottoming pattern we have seen during the past six months and has increased our bullish opinion," Dickey said in a note to clients.
John Hussman of Hussman Funds said those who follow market history see the latest woes as the kind of panic that has occurred before.
"The only thing we have to fear is the fearmongering of Wall Street itself," he said in a research note.
"Investors will berate themselves for the panic they are now exhibiting. This, from an advisor that has adamantly argued for over a decade (with the exception of 2002-2003) that the stock market was strenuously overpriced."
But others say the stock market has not fully priced in the possibility of a prolonged US economic downturn or global recession, and that the odds for this have risen with data showing exceptionally weak consumer spending and manufacturing activity.
Joachim Fels at Morgan Stanley said the freezing of credit around the world has choked off economic growth and that it will take time to recover even with massive amounts of stimulus from government bailouts.