Goldman, Morgan Stanley CEOs Warn of Potential Stock Market Pullback

Wall Street leaders are sounding cautious notes as equity valuations stretch to historically high levels. Goldman Sachs CEO David Solomon predicts a 10%-20% market correction within two years, framing such drawdowns as normal bull market phenomena rather than structural threats. His Morgan Stanley counterpart Ted Pick concurred, suggesting disciplined investors could find opportunity in the volatility.

The warnings come as the S&P 500 trades at 23x forward earnings - a premium valuation that's raising eyebrows across institutional circles. Notably absent is any sense of alarm; both executives characterize potential pullbacks as healthy market mechanisms rather than crisis signals.

Pick anticipates a coming focus on fundamental earnings power, particularly for growth companies outside the frothy tech sector. This aligns with Solomon's observation that temporary corrections shouldn't alter long-term capital allocation strategies.