Wall Street Shows Its 'bouncebackability': McGeever
By Jamie McGeever
ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."
This Britishism is usually related to cliche-prone soccer supervisors trumpeting their groups' ability to respond to defeat. It's unlikely to discover its way across the pond into the Wall Street crowd's lexicon, however it completely summarizes the U.S. stock exchange's strength to all the obstacles, shocks and whatever else that's been thrown 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 recently called into question America's "exceptionalism" in the worldwide AI arms race.
Any among those issues still has the prospective to snowball, larsaluarna.se triggering an avalanche of offering that could push U.S. equities into a correction and bybio.co even bear-market area.
But Wall Street has ended up being extremely durable since the 2022 rout, specifically in the last six months.
Just look at the synthetic intelligence-fueled chaos on Jan. 27, spurred by Chinese start-up DeepSeek's revelation that it had established a large language design that could attain similar or better results than U.S.-developed LLMs at a fraction of the cost. By numerous procedures, the marketplace relocation was seismic.
fell 17%, slicing nearly $600 billion off the company's market cap, the greatest one-day loss for any company ever. The value of the broader U.S. stock market fell by around $1 trillion.
Drilling much deeper, experts at JPMorgan found that the thrashing in "long momentum" - essentially buying stocks that have been carrying out well recently, such as tech and AI shares - was a near "7 sigma" move, or funsilo.date seven times the standard variance. It was the third-largest fall in 40 years for this trading method.
But this impressive move didn't crash the market. Rotation into other sectors accelerated, and around 70% of S&P 500-listed stocks ended the day higher, suggesting the broader index fell only 1.45%. And buyers of tech stocks soon returned.
U.S. equity funds brought in nearly $24 billion of inflows last week, innovation fund inflows hit a 16-week high, and momentum funds brought in favorable circulations for townshipmarket.co.za a fifth-consecutive week, 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 assumptions about AI."
PANIC MODE?
Remember "yenmageddon," the yen bring trade volatility of last August? The yen's abrupt bounce from a 33-year low against the dollar triggered fears that financiers would be forced to sell properties in other markets and countries to cover losses in their substantial yen-funded bring trades.
The yen's rally was severe, on par with previous monetary 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 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 two big tests in the last 6 months, a period that included the U.S. governmental election and Trump's go back to the White House.
What explains the strength? There's nobody obvious answer. Investors are broadly bullish about Trump's financial agenda, ratemywifey.com 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 motorist is a well-worn one: the Fed put. Investors - much of whom have actually spent a great portion of their working lives in the age of extraordinarily loose monetary policy - might still feel that, if it truly boils down to it, the Fed will have their backs.
There will be more pullbacks, and dangers of a more extended decline do appear to be growing. But for now, wolvesbaneuo.com the rebounds keep coming. That's bouncebackability.
(The viewpoints revealed here are those of the author, a writer for Reuters.)
(By Jamie McGeever; Editing by Rod Nickel)