Wall Street Shows Its bouncebackability : McGeever

By Jamie McGeever


ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."


This Britishism is generally connected with managers trumpeting their teams' ability to respond to defeat. It's not likely to find its way throughout the pond into the Wall Street crowd's lexicon, but it perfectly summarizes the U.S. stock exchange's durability to all the problems, shocks and whatever else that's been tossed at it just recently.


And there have actually been a lot: U.S. President Donald Trump's tariff flip-flops, stretched appraisals, severe concentration in Big Tech and the DeepSeek-led turmoil that recently called into question America's "exceptionalism" in the global AI arms race.


Any among those concerns still has the possible to snowball, causing an avalanche of offering that might press U.S. equities into a correction and wolvesbaneuo.com even bear-market territory.


But Wall Street has become incredibly durable because the 2022 thrashing, forum.kepri.bawaslu.go.id especially in the last six months.


Just look at the synthetic intelligence-fueled turmoil on Jan. 27, spurred by Chinese start-up DeepSeek's discovery that it had actually developed a large language design that might attain comparable or better outcomes than U.S.-developed LLMs at a portion of the expense. By lots of procedures, the market 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 exchange fell by around $1 trillion.


Drilling much deeper, analysts at JPMorgan discovered that the rout in "long momentum" - basically purchasing stocks that have been carrying out well recently, such as tech and AI shares - was a near "7 sigma" relocation, or seven times the basic deviation. It was the third-largest fall in 40 years for this trading method.


But this epic relocation didn't crash the marketplace. Rotation into other sectors sped up, and around 70% of S&P 500-listed stocks ended the day higher, suggesting the more comprehensive index fell just 1.45%. And buyers of tech stocks quickly returned.


U.S. equity funds attracted almost $24 billion of inflows last week, innovation fund inflows hit a 16-week high, and momentum funds drew in positive circulations for a fifth-consecutive week, according to EPFR, the fund flows tracking firm.


"Investors saw the DeepSeek-triggered selloff as a chance instead of an off-ramp," EPFR director of research Cameron Brandt composed on Monday. "Fund streams ... suggest that a number of those investors kept faith with their previous presumptions about AI."


PANIC MODE?


Remember "yenmageddon," the yen bring trade volatility of last August? The yen's sudden bounce from a 33-year low against the dollar sparked worries that investors would be required to sell properties in other markets and nations to cover losses in their substantial yen-funded carry trades.


The yen's rally was extreme, on par with past monetary crises, and the Nikkei's 12% fall on Aug. 5 was the biggest one-day drop because October 1987 and the second-largest on record.


The panic, timeoftheworld.date if it can be called that, spread. The S&P 500 lost 8% in 2 days. But it vanished quickly. The S&P 500 recovered its losses within two weeks, and the Nikkei did also within a month.


So Wall Street has passed two big tests in the last 6 months, a period that included the U.S. presidential election and Trump's go back to the White House.


What explains the resilience? There's no one obvious answer. Investors are broadly bullish about Trump's economic agenda, the Fed still seems to be in relieving mode (for classifieds.ocala-news.com now), the AI frenzy and U.S. exceptionalism narratives are still in play, and liquidity is plentiful.


Perhaps one essential motorist is a well-worn one: the Fed put. Investors - a lot of whom have actually spent an excellent piece of their working lives in the age of extraordinarily loose financial policy - might 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 downturn do seem to be growing. But for now, oke.zone the rebounds keep coming. That's bouncebackability.


(The opinions revealed here are those of the author, a writer for Reuters.)


(By Jamie McGeever; Editing by Rod Nickel)