Wall Street CEOs Warn US Stocks Face Over 10% Correction Risk

Top executives from leading Wall Street investment banks, including Morgan Stanley and Goldman Sachs, have collectively warned of a potential stock market correction of 10% to 20% within the next 12 to 24 months amid concerns about high market valuations despite strong corporate earnings. They emphasize that such corrections are a normal, healthy part of market cycles and should be seen as opportunities rather than reasons for panic. Capital Group's CEO, Mike Gitlin, highlighted that most investors view current valuations as between fair and full, with few considering stocks cheap, and noted similar sentiment regarding credit spreads. While technology stocks are perceived as fully valued, the broader market is not uniformly overvalued, and risks remain from potential policy errors and geopolitical uncertainties in the U.S. Despite these concerns, executives recommend staying invested and focusing on portfolio allocation rather than attempting to time the market, with expectations that by 2026, stronger companies will outperform as earnings become a greater focus. Additionally, Goldman Sachs and Morgan Stanley express optimism about Asian markets, contrasting with caution in U.S. equities.