NEW YORK — So you thought Wall Street might be out of the woods? Think again.

A surge of optimism that started a market rally late last year, mercifully quieting the stock market's stomach-churning volatility, has vanished as economic recovery recedes further onto the horizon.

On Wednesday, stocks took a dive reminiscent of the terrifying jumps and drops of last fall, with the Dow Jones industrials falling more than 300 points before closing down 248.

It was the Dow's biggest point drop since Dec. 1 and the first string of six straight down days since early October. The Dow is still 9 percent higher than its November low, but the bumpy decline feels all too familiar.

"It's a good instinct to start a New Year off with optimism," said Art Hogan, chief market analyst at Jefferies & Co. in Boston. "But unfortunately, that tends to fade in the harsh light of reality."

So what happened?

Holiday sales turned out to have been worse than expected, the jobless rate exceeds 7 percent for the first time in 16 years, the global economy is eroding faster and corporations from Alcoa to Intel to Wal-Mart have disappointed investors.

"Right now we just don't have any evidence to show that that free fall is over," said Robert Dye, senior economist at PNC Financial Services Group in Pittsburgh.

For a time, it seemed as if the worst might be over for stocks. After hitting a trough on Nov. 20, the major stock averages all rose by more than 20 percent within six weeks — the kind of rally that usually takes years.

The rally was driven in part by hopes for Washington's aggressive fiscal policies and the upcoming change in the White House. But lately, bears rule Wall Street again as one corporate report after another spreads gloom.

Like others, Dye thinks the market could fall back toward the low point of November. That was when the Standard & Poor's 500 index reached its lowest close in 11 years, at 752, and the Dow reached its lowest in more than five years, at 7,552.

On Friday, the S&P closed at 850.12, the Dow at 8,281.22.

Stock market recoveries usually precede economic recoveries by about six months. Translation: Investors don't expect the economy to turn around before the second half of this year.

"Wall Street wants instant gratification, but economic cycles take years and an economic cycle like this is going to be deeper, longer and uglier than any one we've ever faced," said Harry Rady, chief executive and portfolio manager for Rady Asset Management in San Diego.

Sam Stovall, chief investment strategist at S&P, puts it another way: Investors have put on their 3-D glasses, trying to figure out "the depth, the duration and the diffusion of this global economic slowdown."

And not having much luck.

For now, Hogan said stocks may trade in a much narrower range than they did during the white-knuckle days of October and November, when the Dow routinely rose or fell by 500 points or more in a day.

That range is perhaps 8,000 to 9,000 for the Dow, and 825 to 910 for the S&P, Hogan said. But more bleak news from corporations or Washington could still steer it lower.

For those looking for hopeful signs, consider these: