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The incredibly shrinking Brexit losses

Adam Shell
USA TODAY

Brexit was a real shocker. For two days, the U.S. stock market went down, with the broad Wilshire 5000 Total Market index tumbling 5.6%, a staggering paper loss of $1.4 trillion.

Traders on the floor of the New York Stock Exchange.

Bearish market pundits went into overdrive, zapping out research reports warning of trouble ahead, stitching together a spooky, apocalyptic narrative with all the earmarks of a summer blockbuster horror movie. But then Tuesday came — and the “Brexit Bounce” was born.

S&P 500 shakes off Brexit to 1.9% 2nd-quarter gain

By Thursday, the  Wilshire 5000 — which includes large-company names as well as small- and mid-cap stocks — rallied back 5%. The trio of big up days added up to $1.2 trillion in paper gains.

And while that hefty three-day haul doesn’t erase all of the big losses from the two-day sell-off last Friday and Monday, it did trim the losses to $200 billion. And while $200 billion is still  sizable, erasing a big chunk of the losses went a long way toward downsizing the panic and pessimism that had washed over Wall Street trading desks like a tsunami.

The three-day stock surge illustrates that cooler heads prevailed just in time to help short-circuit a market meltdown.

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