Treasury secretary's words throw stock market much-needed lifeline
Treasury Secretary Bessent offered an encouraging message on trade talks.
The big reason for the stock market drop last week was the higher-than-hoped tariffs unveiled by President Trump on April 2. The "Liberation Day" tariffs revealed ranged from a baseline tariff of 10% to 54% tariffs on China.
Market participants hoped negotiations ahead of the President's Liberation Day announcement would lead to a more tempered approach to import taxes. Since that didn't happen, investors were forced to revamp models to include expectations for higher inflation and slower economic growth, which are the enemy of corporate profits.
The downdraft was fast and sharp. The S&P 500 dropped 10% following the announcement, sending investors scurrying for safety in Treasury Bonds, including the 10-year note, which saw its yield drop below 4% from 4.3% only days earlier.
Related: Surprising China news sends stock market reeling
The stock market sell-off likely didn't go unnoticed by the White House. Over the weekend, the administration went on a media frenzy to pitch its case for tariffs to the American people.
However, in those discussions, there was no acknowledgment that President Trump is open to negotiating lower tariffs. Instead, Commerce Secretary Howard Lutnick and trade adviser Peter Navarro took a mostly hard-line position on tariffs.
