Wall Street Titans Sound Alarm: Goldman Sachs, Morgan Stanley Reportedly Expect 10%-20% Market Correction
Synopsis
Both firms cautioned that the next two years may bring a market correction, even as global stock markets hover near record highs.
- Goldman Sachs CEO David Solomon told investors that markets may face a pullback of between 10% and 20%.
- Morgan Stanley CEO Ted Pick echoed Solomon’s outlook, calling short-term corrections “healthy”.
- The S&P 500 and Nasdaq Composite recently touched new peaks.
Global markets could reportedly be heading toward a pause after a record-breaking rally in 2025, warned top Wall Street executives at Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS).
Both firms cautioned that the next two years may bring a market correction, even as stocks worldwide hover near record highs.
Possible Market Drawdown
According to a CNBC report, the S&P 500 and Nasdaq Composite recently reached new peaks, while the Shanghai Composite hit its strongest level in a decade, amid improving U.S.-China relations and a weaker dollar.
Goldman Sachs CEO David Solomon told investors at the Global Financial Leaders’ Investment Summit in Hong Kong that markets may face a pullback of between 10% and 20% within the next one to two years.
“Things run, and then they pull back so people can reassess.”
-David Solomon, CEO, Goldman Sachs.
However, he emphasized that drawdowns of 10% to 15% are common and should not shake long-term confidence in equity investing. Morgan Stanley CEO Ted Pick echoed Solomon’s outlook, calling short-term corrections “healthy” and a sign of a functioning market rather than the beginning of a tough time.
Tech Earnings, U.S. China Truce Push Markets
Earnings from five of the “Magnificent Seven” tech giants, Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), and Meta (META), provided a push to markets on optimism surrounding their involvement in artificial intelligence projects.
Additionally, the recent meeting between U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, to decide on a framework that could pause tougher U.S. tariffs and China's rare-earth export curbs eased market uncertainties.
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