Following a significant selloff on Wall Street, the most severe since the initial impact of the COVID-19 pandemic, Treasury Secretary Scott Bessent expressed his confidence in the market’s ability to manage increased trading volumes. He noted that Wall Street has historically underestimated President Donald Trump, whose tariff strategies are currently causing concerns about a potential economic recession.
During an interview on NBC’s “Meet the Press,” Bessent provided reassurance about the market’s capacity to handle the surging volumes, describing the stock selloff as a temporary response. He indicated that there was no expectation for President Trump to retract his stringent tariff policies, asserting that a recession is not a necessity despite the growing anxiety in financial circles. This is in contrast to statements from JPMorgan, which cautioned that the tariffs might lead to a GDP contraction.
Bessent, speaking with NBC, highlighted the market’s robust infrastructure, noting that despite record trading volumes, operations continued smoothly, which should reassure the public. On the preceding Friday, major indices experienced significant declines, with the Dow Jones Industrial Average falling by 5.5% (2,231 points), the S&P 500 dropping by 6%, and the Nasdaq decreasing by 5.8%, leading to the latter entering a bear market. This downturn followed turbulent sessions earlier in the week, erasing $6 trillion in market capitalization.
Bessent remarked that short-term market reactions are not uncommon and reiterated that Wall Street often misjudges Trump, alluding to initial stock market reactions following Trump’s unexpected victory in the 2016 election. He reflected on Trump’s tenure as one characterized by high after-inflation returns, resulting in a significant business-friendly atmosphere.
Addressing concerns of those nearing retirement whose portfolios were impacted by the selloff, Bessent refuted worries of financial destitution as exaggerated, emphasizing that most do not solely depend on the stock market for retirement savings. He explained that 401(k) accounts typically consist of a 60-40 stock-bond allocation, which, despite recent fluctuations, is only down by about 5% or 6% year to date.
Bessent suggested that the key to weathering market volatility lies in a long-term investment strategy, advising those with years until retirement to remain calm and not react hastily by altering their 401(k) investments.
