Updated from 5:26 p.m. ET to include commentary on initial jobless claims and information on McKesson's move in after-hours action.

NEW YORK ( TheStreet) -- And so ends the first real blip of 2012's bull run.

Any relief about Wednesday's bounce though has to be set against the fact that the major U.S. equity indices closed well off their highs for the day, and volumes remain dismal, totaling 3.77 billion shares on the New York Stock Exchange and 1.54 billion on the Nasdaq. In other words, no one was chasing the tape, and it's premature to give the all-clear signal.

The idea that 2012's market trajectory so far bears an eerie resemblance to 2011 is no comfort to investors who undoubtedly don't see extreme volatility through the summer ending in a another flat year for the S&P 500 as an attractive scenario.

Capital Economics laid out its take on the recent pullback earlier Wednesday with a good news/bad news scenario that argues both upside and downside may be limited for stocks from here.

"Our view is that the US economy will be more resilient this time around, providing some support for US equities despite the mounting problems elsewhere," wrote analyst Julian Jessop. "However, we expect another rollercoaster ride for riskier assets in general, dragged down by recession in Europe, the disintegration of the euro and much slower growth in China."

The good news is that Jessop expects the S&P 500 to ultimately hang on to most of its current year-to-date gain of 9%. The bad news? His year-end target is 1350, which would be appreciation of 7.3% for the year, but represent additional downside of roughly 1.5% from where the index currently resides in the 1370 range.

"The performance of the S&P 500 (in 2011) was typical of the major equity markets last year: a sluggish first half, a dreadful third quarter, and then a final flourish," Jessop said, adding later: "We are forecasting a similarly lackluster performance this year ... There should also be plenty of volatility along the way, triggered in particular by a further escalation of the crisis in the euro-zone."

Scott Wren, senior equity strategist at Wells Fargo, also took a stab at parsing what this pause means for the steady churn higher that stocks have enjoyed all year. He thinks the rapid rise since October has brought the markets to a crossroads.

"In our opinion, a time out is needed to absorb the robust gains and reassess what the future might hold," he wrote.

Wren thinks the macro outlook is still good for stocks, expecting the economy to continue to expand throughout the year and for earnings growth to remain positive, though slower than what was seen earlier in the recovery. He noted that the Federal Reserve has made it clear that more quantitative easing is still possible if the data takes a turn for the worse or the unemployment rate stalls, and said stock valuations "do not appear excessive" at current levels when compared to historical metrics.

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