WASHINGTON -- Top Trump administration officials and congressional Republicans downplayed Monday's stock market plunge, saying the economy's fundamentals were strong even as they acknowledged the gyrations had gained their attention.
"I'm not overly concerned about the market volatility," Treasury Secretary Steven T. Mnuchin said Tuesday morning at a hearing of the House Financial Services Committee. "The fundamentals are quite strong."
But Mnuchin acknowledged the financial markets were on his mind more than usual.
"I normally would't be looking at my iPhone, but given the market moves, I'm checking it," he said, glancing down at his phone.
"It's now up 187 points," he said of the Dow Jones industrial average, "so we're back up today."
But shortly after his comments the stock index went negative again, punctuating the volatility the day after the Dow's record point drop.
"We are very focused on the long-term economic growth and we believe the policies we've enacted, including tax reform, are very positive for long-term economic growth," Mnuchin said.
The Treasury Department was monitoring financial markets and that they were "functioning very well," he said.
Mnuchin added that despite recent declines, "the stock market is up significantly, over 30 percent, since President Trump was elected."
On Monday, the Dow closed 33 percent higher than it did the day Trump was elected. The broader Standard & Poor's 500 index, which investors tend to favor as a gauge of the U.S. stock market, was up 24 percent in that span.
Mnuchin's comments came the day after stocks plunged: The Dow fell 1,175 points, or 4.6 percent, on Monday. The steep drop added to a decline in recent days and wiped out the Dow's and S&P 500's gains for the year.
On Tuesday, the Dow tumbled as much as 500 points at the market's open, then recouped the morning's losses in early trading before later dropping again.
President Trump has boasted continually in recent months about the booming stock market. He was silent on Monday's declines.
The White House issued a statement late Monday about the market drop, saying: "The president's focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment, and increasing wages for American workers."
Vice President Mike Pence echoed that during a refueling stop in Alaska on his way to the opening ceremony of the Winter Olympics in South Korea. Asked by reporters late Monday for his reaction on the market decline, Pence touted recent strong job and wage growth.
"We couldn't be more proud of the fact that the stock market has increased by thousands of points since election day 2016," Pence said. He called Monday's sell-off "very likely, simply the ebb and flow of our stock markets."
Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, said at Tuesday's hearing that the recent market downturn was a predictable result of a strengthening economy and that Americans should see it as a positive sign.
"After eight years of failed economic policies that led to the slowest, weakest recovery in the modern era," he said, taking a jab at the Obama administration, "the economy is starting to take off and wages are finally growing again. Consumer optimism abounds."
"So how ironic but totally predictable that equity markets would now swoon over the prospects of higher interest rates and possible inflation associated with a breakout of economic growth," Hensarling told Mnuchin. "Artificially low interest rates may have benefited some on Wall Street, but they haven't been particularly helpful to Main Street."
Investors' fears of higher interest rates have helped drive stocks' recent downturn. Federal Reserve officials might need to push interest rates higher to head off higher inflation that could be fueled by the extra stimulus of the tax cuts.
Higher interest rates would make stocks a less attractive investment.
But interest rates also are being pushed up by increased borrowing by the federal government, which is facing higher budget deficits because of the loss of revenue this year from the tax cuts.
The Treasury Department said last week that it expected to borrow $955 billion in the 2018 fiscal year, which began Oct. 1. That's up sharply from $519 billion the previous year, and it would be the most federal borrowing since 2012, when the economy was still in the early stages of recovery from the Great Recession.
The Treasury Department estimated it would need to borrow $1.08 trillion in fiscal 2019 and $1.12 trillion the following year. Increased borrowing pushes up interest rates.
Rep. Carolyn Maloney (D-N.Y.) pressed Mnuchin on what she called "this recent market rout."
"The administration has claimed credit for the markets going up. Are they going to claim credit when the markets go down?" she asked.
"I think we'll still claim credit that it's up over 30 percent since the election," Mnuchin said.
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