Wall Street Shows Its 'bouncebackability': McGeever
By Jamie McGeever
ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."
This Britishism is generally connected with cliche-prone soccer managers trumpeting their teams' ability to react to defeat. It's unlikely to find its method throughout the pond into the Wall Street crowd's lexicon, but it completely summarizes the U.S. stock market's durability to all the problems, shocks and everything else that's been tossed at it recently.
And there have actually been a lot: U.S. President Donald Trump's tariff flip-flops, extended appraisals, extreme concentration in Big Tech and the DeepSeek-led chaos that just recently called into "exceptionalism" in the global AI arms race.
Any one of those problems still has the possible to snowball, causing an avalanche of offering that might push U.S. equities into a correction or perhaps bear-market territory.
But Wall Street has actually become incredibly resilient considering that the 2022 rout, particularly in the last six months.
Just take a look at the synthetic intelligence-fueled turmoil on Jan. 27, spurred by Chinese startup DeepSeek's discovery that it had actually established a big language design that could attain comparable or much better outcomes than U.S.-developed LLMs at a portion of the cost. By lots of measures, the market relocation was seismic.
Nvidia shares fell 17%, slicing almost $600 billion off the company's market cap, the biggest one-day loss for raovatonline.org any company ever. The value of the larger U.S. stock market fell by around $1 trillion.
Drilling deeper, analysts at JPMorgan found that the thrashing in "long momentum" - basically buying stocks that have been carrying out well just recently, such as tech and AI shares - was a near "7 sigma" relocation, or 7 times the standard discrepancy. It was the third-largest fall in 40 years for this trading method.
But this legendary relocation didn't crash the market. Rotation into other sectors sped up, and around 70% of S&P 500-listed stocks ended the day higher, indicating the wider index fell only 1.45%. And purchasers of tech stocks soon returned.
U.S. equity funds drew in nearly $24 billion of inflows last week, innovation fund inflows hit a 16-week high, and momentum funds attracted favorable circulations for a fifth-consecutive week, according to EPFR, the fund streams tracking firm.
"Investors saw the DeepSeek-triggered selloff as an opportunity instead of an off-ramp," EPFR director of research Cameron Brandt wrote on Monday. "Fund flows ... recommend that much of those financiers kept faith with their previous assumptions about AI."
PANIC MODE?
Remember "yenmageddon," the yen bring trade volatility of last August? The yen's unexpected bounce from a 33-year low against the dollar sparked worries that investors would be required to sell possessions in other markets and countries to cover losses in their huge yen-funded carry trades.
The yen's rally was severe, on par with previous monetary crises, and the Nikkei's 12% fall on Aug. 5 was the biggest one-day drop because October 1987 and mediawiki.hcah.in the second-largest on record.
The panic, if it can be called that, spread. The S&P 500 lost 8% in two days. But it vanished quickly. The S&P 500 recovered its losses within two weeks, and the Nikkei did similarly within a month.
So Wall Street has passed 2 big tests in the last 6 months, townshipmarket.co.za a period that included the U.S. governmental election and Trump's return to the White House.
What explains the resilience? There's no one obvious response. Investors are broadly bullish about Trump's financial program, the Fed still appears to be in alleviating mode (for now), the AI craze and U.S. exceptionalism stories are still in play, and liquidity abounds.
Perhaps one key driver is a well-worn one: bphomesteading.com the Fed put. Investors - many of whom have actually spent a good portion of their working lives in the era of extremely loose financial policy - might still feel that, if it really comes down to it, the Fed will have their backs.
There will be more pullbacks, and dangers of a more prolonged slump do appear to be growing. But for now, the rebounds keep coming. That's bouncebackability.
(The viewpoints revealed here are those of the author, a columnist for Reuters.)
(By Jamie McGeever; Editing by Rod Nickel)