U.S. stocks retained sizable losses on Thursday, but recouped more than half of a steep dive, as investors dialed back concern that came with indications of trouble at one of Portugal's top banks.
"We'll have to get bigger, worse news than we've been getting to have a sustained decline," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
The market's comeback from hefty losses could be as simple as people suffering from "non-participant remorse" opting to step in when they see a buying opportunity, said Forrest, who added: "anytime they see a dip like this, they'll go in; I think that's true of institutional investors too, and that makes these dips short-lived."
The market's initial unraveling came after Espirito Santo Financial Group, the biggest stakeholder in Portugal's Banco Espirito Santo, suspended trading in its shares and bonds, citing "material difficulties" at parent ESI.
Read MoreHere's what's happening in Portugal
"Not knowing something is a catchphrase for contagion and added volatility, and we've seen both of those injected into U.S. markets in no uncertain terms," said Andrew Wilkinson, chief market analyst at Interactive Brokers.
The Chicago Board Options Exchange Volatility Index, a measure of investor uncertainty, gained a point, or 8.4 percent, to 12.63.
That said, "fears were perhaps overblown" and Wall Street's initial reaction seems "excessive, given the size of Portugal and the potential for" reigniting a financial-system crisis in the euro zone, given there's little reason to believe that European authorities would not deal with the potential collapse of one of Portugal's largest banks in a prompt and orderly manner, Wilkinson added.
Peter Boockvar, chief market analyst at the Lindsey Group, had a bleaker take, saying the country-specific news from Europe "is a reminder that the region is barely growing, and their economy is as big as ours."