(Bloomberg) — US equity futures dropped after Treasury Secretary Scott Bessent dismissed recent declines as healthy, reinforcing the view that the Trump administration is unlikely to step in to boost markets.
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S&P 500 and Nasdaq 100 contracts fell 0.4%, indicating Wall Street’s four-week run of losses is set to deepen. In premarket trading, the Magnificent Seven group of tech stocks mostly edged lower, though Nvidia Corp. gained before its much anticipated conference on artificial intelligence. Europe’s Stoxx 600 index rose 0.3%, extending its year-to-date outperformance against US stocks.
Bessent told NBC’s Meet the Press Sunday that he’s not worried by the slump in US stocks, after about $5 trillion was wiped from the S&P 500’s value and the index tumbled into a correction. His comments are a blow to those harboring hopes that President Donald Trump will seek to cushion the market impact of his policies.
“This statement caused some alarm for many Wall Street types who had been counting on Bessent to be the second Trump administration’s ‘voice of reason’ on economic policy,” said Benjamin Picton, a strategist at Rabobank.
The comments effectively dash prospects that policymakers will throw “liquidity bones to financial markets whenever they showed signs of wobbling,” Picton added.
Meanwhile, fears of a protracted global trade war are benefiting haven assets, with gold holding close to record highs around $3,000 an ounce, and Treasury yields edging lower. Bund yields dropped six basis points as jitters mounted over Tuesday’s parliamentary vote on Germany’s landmark spending package.
Another potential source of concern is the US threat of “unrelenting” military strikes on Yemen’s Houthi militants, who said they would respond by targeting US vessels in the Red Sea. The events helped lift Brent crude futures about 1.1% above $71 a barrel, while European shipping stocks, including AP Moller-Maersk A/S and Hapag-Lloyd AG, gained.
Later this week, the Federal Reserve, Bank of England and the Bank of Japan are set to hold policy meetings. While they are not expected to change interest rates, investors will watch in particular for any clues from the Fed on what kind of support could be offered to the economy.
Swaps see high odds of three Fed cuts this year, but Fed chair Jerome Powell faces the task of assuring investors the economy remains on solid footing, while signaling policy support will be provided when required. US retail sales data due later Monday are expected to reinforce the picture of a slowing economy, following on from below-forecast inflation readings last week.
