Wall Street Shows Its ‘bouncebackability’: McGeever

By Jamie McGeever

ORLANDO, wifidb.science Florida, Feb 5 (Reuters) – „Bouncebackability.“

This Britishism is usually related to cliche-prone soccer managers trumpeting their groups’ capability to react to defeat. It’s not likely 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 setbacks, shocks and everything else that’s been thrown at it recently.

And there have been a lot: U.S. President Donald Trump’s tariff flip-flops, stretched appraisals, extreme concentration in Big Tech and the DeepSeek-led turmoil that just recently cast doubt on America’s „exceptionalism“ in the worldwide AI arms race.

Any one of those issues still has the prospective to snowball, triggering an avalanche of offering that could press U.S. equities into a correction or perhaps bear-market territory.

But Wall Street has actually ended up being remarkably durable because the 2022 thrashing, especially in the last six months.

Just take a look at the synthetic intelligence-fueled chaos on Jan. 27, stimulated by Chinese startup DeepSeek’s discovery that it had developed a big language model that might attain comparable or much better results than U.S.-developed LLMs at a portion of the cost. By numerous steps, 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 company ever. The worth of the wider U.S. stock exchange fell by around $1 trillion.

Drilling deeper, experts at JPMorgan discovered that the rout in „long momentum“ – essentially buying stocks that have been carrying out well recently, such as tech and AI shares – was a near „7 sigma“ relocation, or 7 times the basic variance. It was the third-largest fall in 40 years for this trading technique.

But this epic 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, meaning the more comprehensive index fell only 1.45%. And purchasers of tech stocks quickly returned.

U.S. equity funds attracted nearly $24 billion of inflows recently, innovation fund inflows struck a 16-week high, and momentum funds attracted positive flows for a fifth-consecutive week, according to EPFR, the fund streams tracking firm.

„Investors saw the DeepSeek-triggered selloff as a chance rather than an off-ramp,“ EPFR director of research study Cameron Brandt wrote on Monday. „Fund streams … recommend that a number 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 sudden bounce from a 33-year low against the dollar sparked fears that financiers would be required to offer properties in other markets and nations to cover losses in their big yen-funded carry trades.

The yen’s rally was severe, on par with previous monetary crises, and sitiosecuador.com the Nikkei’s 12% fall on Aug. 5 was the most significant one-day drop since October 1987 and clashofcryptos.trade the second-largest on record.

The panic, forum.batman.gainedge.org if it can be called that, spread. The S&P 500 lost 8% in two days. But it vanished rapidly. The S&P 500 recouped its losses within 2 weeks, wiki.rolandradio.net and the Nikkei did similarly within a month.

So Wall Street has actually passed 2 big tests in the last six months, a period that included the U.S. presidential election and Trump’s go back to the White House.

What explains the strength? There’s no one obvious response. Investors are broadly bullish about Trump’s financial agenda, the Fed still seems to be in easing mode (in the meantime), the AI frenzy and U.S. exceptionalism stories are still in play, and liquidity abounds.

Perhaps one crucial motorist is a well-worn one: the Fed put. Investors – a number of whom have spent a great piece of their working lives in the age of monetary policy – may still feel that, if it actually comes down to it, the Fed will have their backs.

There will be more pullbacks, garagesale.es and threats of a more prolonged downturn 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)