Wall Street Heavyweights Warn of Potential Stock Market Correction

Recent warnings from CEOs of major banking giants have raised concerns about the possibility of a significant correction in the U.S. stock market. The S&P 500 is at risk of a major pullback, driven by momentum and rate cut expectations rather than economic strength.

Goldman Sachs and Morgan Stanley have also cautioned about inflated stock valuations, echoing concerns raised by the IMF and central bank governors. The recent decline in the US tech sector suggests that the market may be less complacent about valuations as we head into the final months of the year.

Investors are on edge as triggers such as disappointing earnings, softer demand from China, and fiscal strains in the West could spark a sizeable correction. A 15–20% pullback might be enough to turn a slowdown into a self-fulfilling downturn, while an inflation surge remains a second risk scenario.

Despite these warnings, risk sentiment has improved in recent weeks. Mega forces like geopolitical fragmentation and AI are key investment considerations, with a focus on the broadening AI theme supporting an overweight position in U.S. stocks.

The recent pullback in the stock market reflects increasing investor anxiety about record-high valuations amid economic and geopolitical risks. As concerns about an ever-narrowing cohort of stocks driving gains grow louder, the market remains on edge for a potential correction.