White House economic adviser Larry Kudlow urged investors to stay calm and said the stock-market selloff over coronavirus fears was overblown.
The veteran financial guru and former Ronald Reagan adviser also suggested Americans take the opportunity to scoop up shares which he hinted were at bargain prices.
Global markets "have gone too far" and investors should not overreact, Kudlow said as a massive sell-off continued amid fears the coronavirus epidemic could spiral into a pandemic.
Kudlow encouraged long-term investors to get back into the market or increase their positions. He said he believes investors “should not over-react.”
He said the government isn't currently planning “precipitous policies” such as lifting tariffs on Chinese goods. “We just think the economy is sound,” he said.
“Stocks looks pretty cheap to me,” Kudlow added.
Kudlow, speaking to reporters at the White House, said markets may continue to get worse but that the Trump administration was not planning to take any "precipitous" policy actions regarding the U.S. economy right now.
The White House would also continue to work with Congress to take any necessary actions, he added in a separate interview with Fox Business Network.
Investor panic over the outbreak sent world share markets down for the fifth straight day. All the major U.S. stock indexes were down again sharply as of midmorning trading, while a rush to safe assets deepened an inversion of the U.S. Treasury yield curve, a classic recession signal.
Trump and his administration have been under pressure this week amid growing unease in the markets and in the country as the United States reported its first possible community-spread case of the disease, which has expanded to numerous countries beyond China where it first emerged.
The Republican president, who is seeking re-election in the November presidential election, has staked his presidency in large part on the strength of the nation's economy.
"We just think the economy is sound so therefore I just don't think that this short-term stock-market plunge is going to have any long-term effect," Kudlow told reporters, adding that he thought Trump's response to the coronavirus could boost his bid for a second White House term.
Democrats and other critics have raised questions about the administration's response and how well-prepared it is to manage an outbreak.
The number of additional coronavirus cases in the United States is likely to increase but that does not mean they will "skyrocket" in North America, Kudlow told Fox Business Network.
While there are not currently U.S. supply chain problems that does not mean they will not surface, he added. Late Thursday night, the U.S. Food and Drug Administration announced the country's first coronavirus-related drug shortage.
The Dow Jones Industrial Average has shed more than 4,000 points this week. The Dow slumped more than 1,000 points in intraday trading for the third time this week early Friday, as the rapidly spreading coronavirus outbreak raised fears of global recession.
While analysts say the sell-off is driven by concern about the spread of coronavirus and U.S. preparations to combat an outbreak, Trump has said that investors are selling in part out of fear he’ll lose re-election in 2020, citing the Tuesday night debate performance of the candidates vying for the Democratic nomination.
While markets remain smartly higher under Trump, with the S&P 500 up 35% since Election Day in 2016, the declines of the last week have cut the return under his presidency by more than a third.
Material from Bloomberg and Reuters has been used in this report.
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