By Jamie McGeever
ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."
This Britishism is typically related to cliche-prone soccer managers trumpeting their groups' capability to respond to beat. It's unlikely to find its method throughout the pond into the Wall Street crowd's lexicon, but it completely summarizes the U.S. stock exchange's strength to all the obstacles, shocks and whatever else that's been thrown at it just recently.
And grandtribunal.org there have been a lot: U.S. Trump's tariff flip-flops, stretched appraisals, extreme concentration in Big Tech and the DeepSeek-led turmoil that recently called into question America's "exceptionalism" in the international AI arms race.
Any among those concerns still has the prospective to snowball, triggering an avalanche of offering that could push U.S. equities into a correction or even bear-market area.
But Wall Street has actually become remarkably durable given that the 2022 thrashing, especially in the last six months.
Just take a look at the synthetic intelligence-fueled turmoil on Jan. 27, stimulated by Chinese start-up DeepSeek's discovery that it had actually developed a big language design that could attain similar or photorum.eclat-mauve.fr better outcomes than U.S.-developed LLMs at a fraction of the cost. By lots of procedures, the marketplace relocation was seismic.
Nvidia shares fell 17%, slicing nearly $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" - basically buying stocks that have been performing well recently, such as tech and AI shares - was a near "7 sigma" move, or 7 times the standard discrepancy. It was the third-largest fall in 40 years for this trading strategy.
But this legendary 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 broader index fell just 1.45%. And purchasers of tech stocks quickly returned.
U.S. equity funds drew in almost $24 billion of inflows recently, technology fund inflows struck a 16-week high, and momentum funds brought in favorable circulations for a fifth-consecutive week, according to EPFR, the fund flows tracking firm.
"Investors saw the DeepSeek-triggered selloff as an opportunity rather than an off-ramp," EPFR director of research study Cameron Brandt composed 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 sudden bounce from a 33-year low against the dollar sparked fears that investors would be forced to offer assets in other markets and nations to cover losses in their big yen-funded carry trades.
The yen's rally was severe, on par with past financial crises, and bytes-the-dust.com the Nikkei's 12% fall on Aug. 5 was the most significant one-day drop since October 1987 and the second-largest on record.
The panic, if it can be called that, forum.pinoo.com.tr spread. The S&P 500 lost 8% in 2 days. But it disappeared quickly. The S&P 500 recouped its losses within two weeks, larsaluarna.se and the Nikkei did similarly within a month.
So Wall Street has actually passed two huge tests in the last six months, a duration that included the U.S. presidential election and Trump's return to the White House.
What explains the durability? There's nobody obvious response. Investors are broadly bullish about Trump's financial program, the Fed still seems to be in easing mode (in the meantime), akropolistravel.com the AI frenzy and U.S. exceptionalism stories are still in play, and liquidity is numerous.
Perhaps one essential driver is a well-worn one: the Fed put. Investors - much of whom have actually invested an excellent piece of their working lives in the age of extremely loose monetary policy - may still feel that, if it really comes down to it, the Fed will have their backs.
There will be more pullbacks, and risks of a more prolonged recession do appear to be growing. But for now, the rebounds keep coming. That's bouncebackability.
(The viewpoints expressed here are those of the author, a columnist for Reuters.)
(By Jamie McGeever
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Wall Street Shows Its 'bouncebackability': McGeever
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