Treasury Secretary Steven Mnuchin said Tuesday that stock markets are “functioning very well” amid wild volatility after a day of record-breaking losses.
Mnuchin, testifying before the House Financial Services Committee, said the Trump administration is monitoring the markets, but doesn’t see severe threats to the U.S. financial system.
“We are very focused on the long-term economic growth and we believe the policies we’ve enacted including tax reform are very positive,” Mnuchin said, noting the stock markets’ gains since President Trump’s inauguration.
“You’ve seen a normal market correction, although large,” Mnuchin said.
Mnuchin also said the volatility doesn’t pose a risk to the U.S. economy, though he admitted to checking the markets on his cell phone during the hearing.
“I don’t think these types of moves, given how much the market has rallied, pose systemic risk,” Mnuchin said. “You’ve seen a normal market correction, although large.”
U.S. stocks have swung back and forth between deep losses and substantial gains Tuesday. The Dow Jones industrial average opened Tuesday 520 points lower, a day after the index suffered the biggest single-day point loss in history.
The Dow recovered quickly to gains less than 30 minutes after open on Tuesday morning, but slipped into a 52-point loss by 10:30 a.m.
The Nasdaq and S&P 500 also opened lower Tuesday before turning positive. Both indexes suffered 1 percent losses before hovering around their Monday closing levels.
Trump and his top administration officials, including Mnuchin, had frequently bragged about the stock market as it ballooned in value during his first year in office.
Trump often touted the Dow as it broke records, and Mnuchin last year said the stock market was “absolutely” a reflection of the administration’s economic policies.
When Rep. Carolyn Maloney (D-N.Y.) asked Mnuchin if the administration would take the blame for the recent losses, Mnuchin citied the 30-percent rise in the stock market during Trump’s first year.
Investors triggered a massive sell-off Friday that spread into Monday over concerns an improving economy would spur the Federal Reserve to speed up the pace of interest rate hikes.
Economic data released last week showed a better-than-expected increase in jobs, record wage growth and expanding economic growth. Republicans on the financial services panel cited the market plunge as proof the Trump administration’s economic policies are working.
House Banking Committee Chairman Jeb Hensarling (R-Texas) called the market plunge “ironic, but totally predictable.”
“Artificial interest rates have been helpful for some on Wall Street, but not many on Main Street,” said Hensarling, who had long called on the Fed to quicken the pace of rate hikes.
Rep. Bill Huizenga (R-Mich.), chairman of the Banking panel’s subcommittee on capital markets, called the swing “a technical correction.”
Updated at 11:22 a.m.