Wall Street Shows Its 'bouncebackability': McGeever
By Jamie McGeever
ORLANDO, Florida, forum.pinoo.com.tr Feb 5 (Reuters) - "Bouncebackability."
This Britishism is typically connected with cliche-prone soccer supervisors trumpeting their teams' capability to respond to defeat. It's unlikely to discover its method throughout the pond into the Wall Street crowd's lexicon, but it perfectly sums up the U.S. stock market's resilience to all the setbacks, shocks and whatever else that's been thrown at it recently.
And there have been a lot: U.S. President Donald Trump's tariff flip-flops, extended appraisals, severe concentration in Big Tech and wikitravel.org the DeepSeek-led turmoil that recently called into question America's "exceptionalism" in the international AI arms race.
Any among those problems still has the prospective to snowball, causing an avalanche of offering that might push U.S. equities into a correction and even bear-market territory.
But Wall Street has ended up being incredibly resilient since the 2022 thrashing, particularly in the last 6 months.
Just take a look at the synthetic intelligence-fueled turmoil on Jan. 27, stimulated by Chinese startup DeepSeek's discovery that it had actually established a big language design that could attain comparable or much better results than U.S.-developed LLMs at a of the cost. By lots of procedures, the marketplace relocation was seismic.
Nvidia shares fell 17%, slicing almost $600 billion off the firm's market cap, the most significant one-day loss for any company ever. The value of the broader U.S. stock market fell by around $1 trillion.
Drilling much deeper, analysts at JPMorgan discovered that the thrashing in "long momentum" - essentially buying stocks that have been carrying out well just recently, such as tech and AI shares - was a near "7 sigma" move, or seven times the standard variance. It was the third-largest fall in 40 years for this trading strategy.
But this legendary relocation didn't crash the marketplace. Rotation into other sectors accelerated, and around 70% of S&P 500-listed stocks ended the day higher, suggesting the wider index fell just 1.45%. And purchasers of tech stocks soon returned.
U.S. equity funds attracted nearly $24 billion of inflows recently, technology fund inflows struck a 16-week high, and momentum funds attracted favorable circulations for a fifth-consecutive week, higgledy-piggledy.xyz according to EPFR, the fund streams tracking company.
"Investors saw the DeepSeek-triggered selloff as a chance rather than an off-ramp," EPFR director of research Cameron Brandt composed on Monday. "Fund streams ... suggest that many of those financiers kept faith with their previous presumptions 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 stimulated worries that investors would be required to sell assets in other markets and nations to cover losses in their big yen-funded carry trades.
The yen's rally was extreme, on par with past monetary crises, and wolvesbaneuo.com the Nikkei's 12% fall on Aug. 5 was the greatest one-day drop since October 1987 and the second-largest on record.
The panic, if it can be called that, spread. The S&P 500 lost 8% in 2 days. But it disappeared quickly. The S&P 500 recovered its losses within two weeks, and the Nikkei did also within a month.
So Wall Street has passed 2 big tests in the last six months, a duration that included the U.S. presidential election and Trump's go back to the White House.
What explains the resilience? There's nobody apparent answer. Investors are broadly bullish about Trump's economic program, the Fed still seems to be in easing mode (for now), the AI craze and U.S. exceptionalism narratives are still in play, and liquidity is abundant.
Perhaps one crucial motorist is a well-worn one: the Fed put. Investors - numerous of whom have invested a great piece of their working lives in the era of extraordinarily loose financial policy - may 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 extended downturn do seem to be growing. But for now, bybio.co the rebounds keep coming. That's bouncebackability.
(The viewpoints expressed here are those of the author, a writer for Reuters.)
(By Jamie McGeever; Editing by Rod Nickel)