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The incredibly shrinking Brexit losses

Brexit was a real shocker. For two days, the U.S. stock market went down in shocking fashion, with the broad Wilshire 5000 Total Market index tumbling 5.6%, which added up to a staggering paper loss of $1.4 trillion. In two days! 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.

By Thursday, just three days later, the broad 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 broad U.S. stock gauge’s losses to $200 billion.

And while $200 billion is still a sizable piece of change, even by Wall Street standards, erasing a big chunk of the losses went a long way toward downsizing the super-sized levels of fear, panic and pessimism that had washed over Wall Street trading desks like a tsunami.

Whether Brexit is now in the rearview mirror for good is still hard to know.

What is known, however, is that the three-day stock surge illustrates that cooler heads prevailed just in time to help short-circuit a market meltdown.