Wall Street Shows Its 'bouncebackability': McGeever
By Jamie McGeever
ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."
This Britishism is typically associated with cliche-prone soccer supervisors trumpeting their teams' ability to react to beat. It's not likely 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 just recently.
And there have been a lot: asteroidsathome.net U.S. President Donald Trump's tariff flip-flops, extended appraisals, extreme concentration in Big Tech and the DeepSeek-led chaos that just recently cast doubt on America's "exceptionalism" in the worldwide AI arms race.
Any one of those problems still has the possible to snowball, causing an avalanche of selling that could press U.S. equities into a correction and even bear-market territory.
But Wall Street has actually ended up being remarkably resilient since the 2022 thrashing, forum.pinoo.com.tr especially in the last 6 months.
Just look at the artificial intelligence-fueled chaos on Jan. 27, spurred by Chinese start-up DeepSeek's revelation that it had established a big language model that might attain similar or much better results than U.S.-developed LLMs at a portion of the expense. By many measures, the marketplace move was seismic.
Nvidia shares fell 17%, slicing nearly $600 billion off the company's market cap, the biggest one-day loss for any business ever. The worth of the broader U.S. stock market fell by around $1 trillion.
Drilling deeper, experts at JPMorgan found that the rout in "long momentum" - essentially purchasing stocks that have actually been carrying out well just recently, such as tech and AI shares - was a near "7 sigma" relocation, or seven times the standard discrepancy. It was the third-largest fall in 40 years for bphomesteading.com this trading strategy.
But this legendary move didn't crash the market. Rotation into other sectors sped up, and around 70% of S&P 500-listed stocks ended the day higher, implying the wider index fell just 1.45%. And buyers of tech stocks soon returned.
U.S. equity funds drew in nearly $24 billion of inflows recently, innovation fund inflows hit a 16-week high, and momentum funds attracted positive flows for a fifth-consecutive week, according to EPFR, the fund streams tracking company.
"Investors saw the DeepSeek-triggered selloff as a chance instead of an off-ramp," EPFR director wiki.eqoarevival.com of research Cameron Brandt wrote on Monday. "Fund streams ... recommend that a number of those investors kept faith with their previous assumptions about AI."
PANIC MODE?
Remember "yenmageddon," the yen carry trade volatility of last August? The yen's sudden bounce from a 33-year low against the dollar sparked fears that investors would be forced to offer properties in other markets and countries to cover losses in their substantial yen-funded bring trades.
The yen's rally was extreme, on par with past financial crises, and the Nikkei's 12% fall on Aug. 5 was the most significant one-day drop because October 1987 and 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 quickly. The S&P 500 recouped its losses within two weeks, fraternityofshadows.com and the Nikkei did likewise within a month.
So Wall Street has actually passed two huge tests in the last six months, a duration that consisted of the U.S. governmental election and Trump's go back to the White House.
What explains the durability? There's nobody apparent response. Investors are broadly bullish about Trump's economic program, the Fed still seems to be in relieving mode (in the meantime), the AI frenzy and U.S. exceptionalism narratives are still in play, and liquidity abounds.
Perhaps one essential driver is a well-worn one: forum.pinoo.com.tr the Fed put. Investors - a number of whom have actually spent a great piece of their working lives in the era of extraordinarily loose financial policy - may still feel that, if it truly comes down to it, the Fed will have their backs.
There will be more pullbacks, and threats 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)