By Jamie McGeever
ORLANDO, Florida, Feb 5 (Reuters) - "Bouncebackability."
This Britishism is typically connected with cliche-prone soccer supervisors trumpeting their groups' capability to react to beat. It's unlikely to discover its method across the pond into the Wall Street crowd's lexicon, however it completely summarizes the U.S. stock exchange's durability to all the obstacles, shocks and everything else that's been tossed at it recently.
And ratemywifey.com 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 just recently cast doubt on America's "exceptionalism" in the international AI arms race.
Any among those problems still has the possible to snowball, triggering an avalanche of selling that might press U.S. equities into a correction or perhaps bear-market area.
But Wall Street has actually become remarkably resistant given that the 2022 rout, especially in the last six months.
Just look at the synthetic intelligence-fueled turmoil on Jan. 27, spurred by Chinese start-up DeepSeek's revelation that it had developed a large language model that could attain similar or much better outcomes than U.S.-developed LLMs at a portion of the cost. By many steps, the marketplace move was seismic.
Nvidia shares 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 wider 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 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 technique.
But this epic move didn't crash the market. Rotation into other sectors accelerated, and akropolistravel.com around 70% of S&P 500-listed stocks ended the day higher, suggesting the more comprehensive index fell only 1.45%. And purchasers of tech stocks quickly returned.
U.S. equity funds attracted almost $24 billion of inflows recently, technology fund inflows hit 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 a chance instead of an off-ramp," EPFR director of research Cameron Brandt composed on Monday. "Fund flows ... recommend that a lot of those financiers kept faith with their previous presumptions about AI."
PANIC MODE?
Remember "yenmageddon," the yen carry trade volatility of last August? The yen's abrupt bounce from a 33-year low against the dollar stimulated fears that investors would be required to offer assets in other markets and countries to cover losses in their substantial yen-funded carry trades.
The yen's rally was severe, on par with previous monetary crises, and the Nikkei's 12% fall on Aug. 5 was the biggest one-day drop given that October 1987 and oke.zone the on record.
The panic, if it can be called that, king-wifi.win spread. The S&P 500 lost 8% in two days. But it disappeared 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 six months, a period that included the U.S. governmental election and Trump's go back to the White House.
What explains the durability? There's nobody apparent response. Investors are broadly bullish about Trump's economic agenda, the Fed still seems to be in easing mode (in the meantime), the AI frenzy and U.S. exceptionalism narratives are still in play, and liquidity is abundant.
Perhaps one key chauffeur is a well-worn one: the Fed put. Investors - numerous of whom have spent an excellent portion of their working lives in the era of extremely loose financial policy - might still feel that, if it truly comes down to it, the Fed will have their backs.
There will be more pullbacks, and risks of a more prolonged downturn do seem to be growing. But for now, the rebounds keep coming. That's bouncebackability.
(The viewpoints expressed here are those of the author, a writer for Reuters.)
(By Jamie McGeever
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Wall Street Shows Its 'bouncebackability': McGeever
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