Wall Street Leaders Warn of 10–15% Market Correction, Call It a ‘Healthy Reset’

Top executives from several leading Wall Street firms have cautioned that global equity markets could see a decline of more than 10% over the next one to two years, emphasizing that such a move would represent a normal phase in the market cycle rather than the start of a crisis.

Speaking at a financial summit hosted by the Hong Kong Monetary Authority, Capital Group CEO Mike Gitlin said valuations had become increasingly stretched despite resilient corporate earnings. "Most people would say we're somewhere between fair and full," he observed, adding that credit spreads remain tight — a sign that risk premiums are relatively low.

Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David Solomon echoed similar sentiments, both noting that markets may be due for a correction following years of steady gains. Pick cited "policy error risk" in the United States and ongoing geopolitical tensions as potential triggers for a short-term pullback, describing a 10% to 15% decline as "a healthy development."

Solomon added that while technology stocks appear expensive, other sectors remain reasonably valued. "It just means things run and then they pull back so people can reassess, "he said.

The warnings come as major U.S. equity benchmarks trade at elevated multiples. The S&P 500 currently commands around 23 times forward earnings, compared with a five-year average of 20 times, while the Nasdaq 100 is valued at roughly 28 times earnings — significantly higher than its 2022 level of 19 times. Nasdaq futures slipped nearly 1.8% on Tuesday, led by a pre-market decline of over 7% in Palantir Technologies.

Citadel CEO Ken Griffin described the current environment as "very deep into a bull market, "noting that investor sentiment tends to become "most irrational at extreme highs and lows."

Analysts say a moderate correction could prompt retail investors to adjust exposure — with some seeking safety and others taking advantage of lower valuations — potentially heightening short-term market volatility.