Wall Street Shows Its 'bouncebackability': McGeever

By Jamie McGeever

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

This Britishism is typically related to managers 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, however it perfectly sums up the U.S. stock market's resilience to all the setbacks, shocks and everything 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, severe concentration in Big Tech and accc.rcec.sinica.edu.tw the DeepSeek-led turmoil that recently called into question America's "exceptionalism" in the international AI arms race.

Any one of those concerns still has the potential to snowball, causing an avalanche of offering that might press U.S. equities into a correction or perhaps bear-market territory.

But Wall Street has actually ended up being remarkably resilient considering that the 2022 rout, especially in the last 6 months.

Just take a look at the synthetic intelligence-fueled turmoil on Jan. 27, spurred by Chinese start-up DeepSeek's discovery that it had actually established a large language model that might attain comparable or better outcomes than U.S.-developed LLMs at a portion of the cost. By many measures, the marketplace relocation was seismic.

Nvidia shares fell 17%, slicing almost $600 billion off the firm's market cap, the greatest one-day loss for any business ever. The worth of the larger U.S. stock market fell by around $1 trillion.

Drilling deeper, analysts at JPMorgan discovered that the rout in "long momentum" - basically purchasing stocks that have actually been performing well recently, such as tech and AI shares - was a near "7 sigma" move, or 7 times the standard variance. It was the third-largest fall in 40 years for this trading strategy.

But this impressive move didn't crash the market. Rotation into other sectors sped up, and around 70% of S&P 500-listed stocks ended the day greater, implying the wider index fell just 1.45%. And buyers of tech stocks soon returned.

U.S. equity funds brought in nearly $24 billion of inflows last week, technology fund inflows hit a 16-week high, and momentum funds brought in favorable 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 Cameron Brandt wrote on Monday. "Fund streams ... suggest that much 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 sparked fears that financiers would be forced to sell assets in other markets and countries to cover losses in their huge yen-funded carry trades.

The yen's rally was severe, wiki.eqoarevival.com on par with previous monetary crises, visualchemy.gallery and the Nikkei's 12% fall on Aug. 5 was the most significant one-day drop given that 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 also within a month.

So Wall Street has actually passed 2 huge tests in the last six months, a duration that consisted of the U.S. presidential election and Trump's return to the White House.

What explains the resilience? There's nobody apparent answer. Investors are broadly bullish about Trump's economic program, imoodle.win the Fed still appears to be in easing 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 - a lot of whom have invested a great portion of their working lives in the period of extremely loose monetary policy - may still feel that, if it actually boils down to it, links.gtanet.com.br the Fed will have their backs.

There will be more pullbacks, and risks of a more extended decline do seem to be growing. But for now, the rebounds keep coming. That's bouncebackability.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Rod Nickel)