U.S. Treasury Secretary Henry Paulson said on Thursday that the major drop in U.S. stock market reflected the market volatility and would not represent a financial shock.
"What we're seeing right now is market volatility of the kind that happens when risk gets repriced from time to time," he said in an interview on Bloomberg Television.
He noted that U.S. economy was healthy and global expansion was strong, though it was experiencing "a very major correction" in the housing market.
"What I've been saying for some time now is whenever we have extended period of good markets, a benign economic situation, there's a tendency for laxness and you can see excesses," he said.
In the closing trading on Thursday, the Dow Jones Industrial Average was down 311. 50, or 2.26 percent, due to concern over cooling housing market and subprime loan crisis. It was the biggest loss since Feb. 27, to 13,473.57.
The Standard & Poor's 500 index fell 34.98, or 2.30 percent, to 1,483.11. The Nasdaq composite index fell 48.83, or 1.84 percent, to 2,599.34.
Earlier Thursday, the Commerce Department reported that new home sales in the United States fell by 6.6 percent in June, the largest amount in five months and more than triple what had been expected.
But Paulson concluded that the cooling housing market would not pose threat to the whole economy.
"I don't think it poses a serious risk to the overall economy because we have a diverse, healthy economy," he said.
Source: Xinhua
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