The market may swing day to day, but the underlying fundamentals are still strong, U.S. Treasury Secretary Steven Mnuchin told lawmakers during a hearing before the House Financial Services Committee on Tuesday.
“I'm not overly concerned about the market volatility,” Mnuchin said, adding that he had been told by experts that there were no systemic issues sparking the massive selloff.
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At the close of the trading session on Monday, the Dow Jones industrial average plummeted a record 1,175 points, down 4.6%. The S&P 500 dropped 113 points, or 4.1%.
Monday’s pullback erased the Dow’s year-to-date gains as the blue-chip index notched its largest point decline in history.
“I think you’ve seen a normal market correction, although large … the market moves both ways,” Mnuchin said.
Stocks were equally volatile during the morning hours of the trading session Tuesday, as the Dow swung more than 100 points into the green, before swinging equally as far into the red. As of midday, the Dow was down more than 50 points.
Strong economic indicators and a robust January employment report are sparking fears on Wall Street regarding the pace of the Federal Reserve’s interest rate increases as it continues the process of unwinding its massive balance sheet. Mnuchin said the administration has been working with the Fed on the normalization process and monitoring reaction in the stock market.
When asked whether the Trump administration planned to take responsibility for any downturn in stock prices after taking credit for the post-election momentum, Mnuchin said it would “still take credit for the fact that the market is up 30% since the election.” The Treasury secretary declined to speculate about which direction stocks will move in the future.
Since Trump’s inauguration in January 2017, the Dow is still up more than 22%.
Mnuchin appeared before lawmakers in the House on Tuesday to discuss the annual report of the Financial Stability Oversight Committee, though lawmakers took the opportunity to ask him about a range of other subjects, including sanctions against Russia and collusion between the Trump administration and Russian officials during the 2016 presidential campaign.