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’ capability to respond to defeat. It’s not likely to discover its way across the pond into the Wall Street crowd’s lexicon, however it completely sums up the U.S. stock market’s durability to all the problems, shocks and everything else that’s been tossed at it just recently.

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

Any among those issues still has the prospective to snowball, causing an avalanche of offering that might press U.S. equities into a correction and even bear-market area.

But Wall Street has actually become extremely resilient since the 2022 thrashing, particularly in the last six months.

Just look at the synthetic intelligence-fueled chaos on Jan. 27, stimulated by Chinese start-up DeepSeek’s discovery that it had developed a big language model that might attain comparable or better results than U.S.-developed LLMs at a portion of the cost. By lots of procedures, the marketplace move was seismic.

Nvidia shares fell 17%, slicing nearly $600 billion off the company’s market cap, the most significant one-day loss for any business ever. The value of the .S. stock exchange fell by around $1 trillion.

Drilling deeper, analysts at JPMorgan found that the rout in “long momentum” – basically purchasing stocks that have been performing well just recently, such as tech and AI shares – was a near “7 sigma” relocation, or 7 times the standard deviation. It was the third-largest fall in 40 years for this trading method.

But this legendary relocation didn’t crash the market. Rotation into other sectors accelerated, pipewiki.org and around 70% of S&P 500-listed stocks ended the day higher, suggesting the wider index fell only 1.45%. And purchasers of tech stocks quickly returned.

U.S. equity funds drew in almost $24 billion of inflows last week, innovation 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 company.

“Investors saw the DeepSeek-triggered selloff as a chance instead of an off-ramp,” EPFR director of research Cameron Brandt wrote on Monday. “Fund flows … recommend 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 triggered worries that financiers would be required to sell assets in other markets and countries to cover losses in their big yen-funded bring trades.

The yen’s rally was extreme, on par with past financial crises, and asteroidsathome.net the Nikkei’s 12% fall on Aug. 5 was the biggest one-day drop since October 1987 and the second-largest on record.

The panic, if it can be called that, higgledy-piggledy.xyz spread. The S&P 500 lost 8% in 2 days. But it vanished quickly. The S&P 500 recovered its losses within two weeks, and the Nikkei did likewise within a month.

So Wall Street has actually passed 2 huge tests in the last 6 months, a duration that included the U.S. presidential election and Trump’s go back to the White House.

What explains the strength? There’s nobody apparent answer. Investors are broadly bullish about Trump’s economic agenda, the Fed still seems to be in alleviating mode (for now), photorum.eclat-mauve.fr the AI frenzy and U.S. exceptionalism stories are still in play, and liquidity abounds.

Perhaps one crucial chauffeur is a well-worn one: the Fed put. Investors – many of whom have invested an excellent chunk of their working lives in the age of extraordinarily loose financial policy – might still feel that, ratemywifey.com if it actually comes down to it, the Fed will have their backs.

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

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

(By Jamie McGeever; Editing by Rod Nickel)