According to the Zhitong Finance APP, U.S. Treasury Secretary Scott Basset stated on Wednesday local time that the recent continuous decline in the U.S. stock market is mainly due to the sharp correction trend of large U.S. technology stocks triggered by the rapid global popularity of the DeepSeek open-source AI large model since the beginning of this year, rather than the trade protectionist policies of the Trump administration.
&#34;My duty is to be a good U.S. Treasury Secretary, not a financial market commentator. However, it is important to point out that the Nasdaq index peaked at the moment when DeepSeek became popular worldwide, so this is related to the AI competitiveness or overvaluation issues of the 'Magnificent Seven' (i.e., Mag 7) itself, and has nothing to do with Trump's MAGA policies (i.e., 'Make America Great Again' policies),&#34; Basset said during a media interview on Wednesday evening local time.
MAGA, short for &#34;Make America Great Again,&#34; can refer to the core tone of all policies led by the Trump administration, and is also used by some mainstream media to refer to Trump himself and the fervent supporters of Trump in the U.S.
The Chinese AI startup DeepSeek mentioned by Basset, based on its next-generation open-source large language model's generative AI application, caused a significant drop in the U.S. tech sector when it topped the Apple APP chart at the end of January.
This Chinese AI startup released a highly competitive open-source AI large model this year, with training/inference costs significantly lower than those of tech companies like Meta and OpenAI, which has fundamentally shaken the market's outlook and investment confidence regarding the massive AI investments of U.S. tech giants. Subsequently, global investors launched an &#34;AI investment frenzy&#34; in the Chinese stock market—investors found a new investment direction with advantageous valuations, strong fundamentals, and AI capabilities comparable to those of the U.S.: Chinese tech giants.
The stock prices of the &#34;Magnificent Seven&#34; U.S. tech giants, composed of Apple, Amazon, Tesla, Google's parent company Alphabet, Microsoft, Meta, and Nvidia, have faced significant sell-offs since the end of January, collectively entering a downward trajectory that has heavily dragged down the Nasdaq Composite Index, which is primarily composed of tech stocks, into a technical adjustment range. This tech stock benchmark index has fallen about 13% from its all-time high set on December 16.
The so-called &#34;Magnificent Seven&#34; occupy a high weight in the S&amp;P 500 index and the Nasdaq—accounting for as much as 40% of market capitalization weight—thus the &#34;Seven Giants&#34; have been a core negative catalyst for the U.S. stock market's underperformance compared to global markets and the significant decline of both benchmark indices into the so-called &#34;correction zone.&#34; Statistics show that on March 10, the market capitalization of the &#34;U.S. tech Magnificent Seven,&#34; which holds a high weight in the S&amp;P 500 and Nasdaq, evaporated by over $830 billion, setting a record for the highest cumulative single-day market capitalization loss for the Seven Giants.
The &#34;U.S. tech Seven Giants&#34; are the core driving force behind the S&amp;P 500 index's repeated record highs. Looking at the entire U.S. stock market, the Seven Giants have been the most core force leading the entire U.S. stock market since 2023, leveraging the incredibly strong revenue brought by AI, solid fundamentals, years of sustained strong free cash flow reserves, and an expanding stock buyback scale
Attracting funds from around the world.
However, since the beginning of this year, especially after the emergence of DeepSeek-R1, the logic of the seven giants leading the U.S. stock market has fundamentally changed. The stock performance of these tech giants has significantly underperformed the S&amp;P 500 index, becoming the core negative catalyst dragging down the entire U.S. stock market. Investors have begun to strongly question the high valuations of American tech giants and the reasonableness of their AI spending plans, which have been described as frenzied over the past two years, as well as the potential pressure on these tech giants, which rely on international supply chains, from the &#34;tariff stick&#34; wielded by Trump.
At the end of January, the emergence of the open-source large model DeepSeek-R1 led to a new paradigm of &#34;ultra-low-cost AI training/inference,&#34; significantly streamlining the workload for deploying AI large models. At that time, this caused Nvidia's market value to evaporate by $589 billion in a single day, setting a record for the largest market value loss in U.S. stock market history.
Additionally, it is worth noting that the current U.S. Treasury Secretary Janet Yellen, who was once a proud disciple of the &#34;Wall Street financial tycoon&#34; George Soros, has downplayed the impact of Trump's high tariff policies. These sudden and aggressive tariffs caught many investors off guard, exacerbating market concerns about a comprehensive rebound in U.S. inflation, slowing economic growth, and even the risk of &#34;stagflation&#34; and recession. Most investors attribute the decline of the S&amp;P 500 index from its historical peak earlier this year to Trump's tariff policies. Wall Street defines a 10% drop from recent highs as a &#34;technical adjustment trend.&#34;
On Wednesday evening local time, Trump signed an aggressive &#34;reciprocal tariff&#34; policy at the White House, imposing tariffs of at least 10% or even higher on certain countries. This policy triggered a massive sell-off in the U.S. stock market during after-hours trading, with S&amp;P 500 futures falling nearly 4% and the Dow Jones Industrial Average plummeting by 1,100 points. The S&amp;P 500 index is likely to undergo another significant adjustment on Thursday's trading day.
&#34;As long as we create the optimal economic environment, the market will eventually stabilize,&#34; Yellen emphasized in an interview. &#34;Looking back at the market, we can observe that the U.S. stock market actually peaked on the day DeepSeek became popular globally. The current volatility is more about specific sell-offs in the large tech sector.&#34;
The market generally believes that Trump's aggressive tariff policy is the culprit behind the U.S. stock market crash.
Trump's series of aggressive protectionist policies, including imposing tariffs and expelling immigrants, has severely undermined the confidence index of American businesses and consumers, significantly raising consumer inflation expectations and expectations of economic stagnation and recession. This has made global institutions and individual investors increasingly cautious about investing in the U.S. market. Since February, when Trump's new administration fully focused on imposing tariffs, a growing amount of global funds has fled the U.S. stock market.
Against the backdrop of a sharp turn towards aggressive policies such as tariffs and immigration expulsion, leading to a comprehensive deterioration of economic data like inflation and consumer confidence, the Trump administration's cabinet even refused to lend a helping hand to the declining U.S. stock market, causing the long-standing &#34;buy the dip&#34; strategy in the U.S. stock market to fail completely, resulting in significant losses for billions in retail investors who bought the dip
The market had eagerly anticipated the so-called &#34;Trump put options&#34; to significantly boost the underperforming U.S. stock market this year. However, Trump and U.S. Treasury Secretary Janet Yellen recently did not reveal any supportive or reassuring stance towards the U.S. stock market. Instead, they emphasized that as the U.S. economy moves away from dependence on government spending, it may inevitably undergo a &#34;detox&#34; period.
Trump himself stated that the U.S. economy will have a &#34;transition period,&#34; and the tariffs will inevitably bring &#34;disruptions,&#34; stressing that tariffs are meant to make America prosperous again and to &#34;Make America Great Again.&#34; Trump has repeatedly downplayed market concerns about a U.S. economic recession and predicted that the U.S. will not fall into recession. &#34;You can't just keep staring at the stock market; it will go up and it will go down. But you know what? We have to rebuild our country.&#34;
In response, investors began to withdraw from U.S. risk assets and heavily sold off the best-performing tech giant stocks from the long bull market in U.S. stocks that started in October 2022 to realize profits. At the same time, the significant uncertainty brought by the Trump administration, especially the immense pressure it exerts on the macroeconomic level, has led investors to remain cautious rather than choosing to &#34;buy the dip&#34; as they usually would.
Meanwhile, non-U.S. stock markets such as those in China and Europe, as well as safe-haven asset classes like gold and U.S. Treasury bonds, have increasingly attracted the favor of Wall Street hedge funds and traditional investment institutions

DPSK

U.S. Treasury Secretary Janet Yellen stated that the sharp decline in U.S. stocks is primarily due to the popularity of DeepSeek's open-source AI large model, leading to a significant correction in tech stocks, rather than Trump's tariff policy. She emphasized that the Nasdaq index peaked when DeepSeek became popular worldwide, indicating that the issue lies with the AI competitiveness and high valuations of the tech giants themselves. The success of DeepSeek has sparked global investor interest in Chinese tech stocks, forming a new investment trend

- U.S. Treasury Secretary Scott Bessenet stated that the recent decline in U.S. stock markets is primarily due to the rapid rise of the open-source AI model DeepSeek, rather than Trump's trade protectionist policies.  
- The "Magnificent Seven" tech stocks have faced significant sell-offs since the peak coinciding with DeepSeek's popularity, leading to a 13% drop in the Nasdaq index from its December high.  
- Bessenet emphasized that the current market volatility is more related to specific issues within large tech companies rather than the impact of tariffs imposed by the Trump administration.

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U.S. Treasury Secretary Janet Yellen actually "covers her ears and steals the bell": What triggered the plunge in U.S. stocks was the "DeepSeek moment" rather than Trump's tariffs