THE blizzard of '96 that roared through the canyons of Wall Street last week left more than piles of snow in its wake. At major investment houses, a discernable chill has set in, with talk that a stock-market downturn may be just around the corner - or perhaps already beginning.
A downward ''correction'' of 5 or 10 percent is possible for several reasons, some analysts say: slower growth in the US economy; smaller-than-expected corporate earnings; and the federal-budget impasse between the White House and Congress.
Not everyone here expects a correction. Low interest rates and tame inflation have some saying the market can shrug off a bit of bad news. But even without a correction, financial markets are expected to be far more turbulent in 1996 than they were in 1995, because share prices for many companies are high.
''You have to give sellers, not buyers, the benefit of the doubt in this market environment,'' says Gregory Nie, chief statistician for Everen Securities Inc. in Chicago.
''These next two weeks will be crucial,'' says Mr. Nie. He sees the possibility that the Dow Jones industrial average, which ended last week at 5,061.12, could slide as low as 4,800 points. Volatility will also increase, he says.
''Just a one point change [a dollar in share price] in all the stocks listed in the Dow industrial average means a change of 87 points in the average itself,'' Nie says. Why? Because ''25 of the 30 stocks in the Dow are now fairly expensive, costing over $40 a share. Fractional moves in share prices can quickly lead to large shifts in the Dow average.''
Investors hardly have to be reminded. Prices dropped sharply last week - 165 points on Tuesday and Wednesday alone - representing a decline of 3.2 percent in overall market value and the shedding of millions of dollars in wealth. For the week, the market shifted downward 120.31 points. Though the market opened yesterday on up note, more bumps are possible as investors sort out everything from the budget talks to the appropriate value for technology stocks.
Yields on long-term Treasury bonds, which had been falling steadily, inched up last week, reflecting unease over the federal-budget impasse. That is worrisome here. Higher interest rates are one of the two worst bugaboos of the stock market.
The other stock market dread is lower corporate profits. The latest news on that front has not been especially happy either, says Nie.
Among companies that reported lower fourth-quarter earnings or lower anticipated earnings last week were Apple Computer, Motorola, and Aluminum Company of America.
Just when could a correction come? Many strategists here would probably agree with Hildegard Zagorski, an analyst with Prudential Securities Inc., who says it could come ''any one of these days.'' Prudential, she says, believes a downturn could range between 5 percent and 10 percent. Afterward the market should again show gains, ''reaching the 7,000 point level on the Dow by 1997.''
''It could be that we are already in the correction, but it is still a little too early to tell,'' says Arnold Kaufman, a vice president of Standard & Poor's and editor of ''The Outlook,'' the financial firm's monthly market report. ''There could be a few attempts at market rallies during the next few days, before we get a sharper decline downward.''
Standard & Poor's still envisions the market turning in a decent year in 1996, says Mr. Kaufman, based on stronger performance in the second half of the year. Total return for investors should reach at least 7 percent in 1996, including dividends, he says.
The key to what happens next, most experts here say, lies with millions of individual investors, particularly mutual-fund buyers. The evidence to date, as measured by a lack of rush towards redemptions, suggests no great panic among individuals.
''I'm not particularly concerned about a 5 percent to 10 percent correction,'' says one keen mutual fund investor, Earl Zastro, a claims-adjustor in Chicago. ''Market blips come and go. I'm a long-term investor.''
Mr. Zastro is well diversified, owning several international and gold mutual funds, as well as more conventional funds.
''I have shifted a little more into international funds now, particularly Asia, which should help offset any declines in the US market,'' he says.