By Alexandra Semenova and Jess Menton
A chorus of stock market prognosticators at some of Wall Street’s biggest firms is warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data.
On Monday, Morgan Stanley, Deutsche Bank AG and Evercore ISI all cautioned that the S&P 500 Index is due for a near-term drop in the weeks and months ahead. The predictions come after a furious rally from April’s lows that propelled the gauge to levels it has never seen before.
Morgan Stanley strategist Mike Wilson sees a correction of up to 10% this quarter as tariffs hit consumers and corporate balance sheets. Evercore’s Julian Emanuel is expecting a more substantial decline of as much as 15%. And a team at Deutsche Bank led by Parag Thatte notes that a small drawdown in equities is overdue considering they’ve been on a tear for over three months.
“Over the last couple of weeks, we have noted that investors should expect a modest pullback in the third quarter,” Wilson said in his note to clients.
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