CEOs of Morgan Stanley and Goldman Sachs caution investors against “unrealistic optimism” amid record S&P 500 highs.
A Wave of Caution From the Top
The heads of two of Wall Street’s most powerful investment banks have issued rare public warnings that global markets could soon face a correction after months of relentless gains.
Morgan Stanley CEO Ted Pick and Goldman Sachs chief David Solomon both voiced concern that valuations across major U.S. indices have detached from economic reality, fueled by speculative money pouring into tech and AI-related stocks.
We’re in one of those euphoric stretches where risk is being mispriced,” Pick said during an investor forum in New York on Monday. “Markets have forgotten what downside feels like.
The S&P 500 closed at another record high last week, climbing more than 20 % year-to-date, while the Nasdaq Composite is up over 30 % - gains both executives described as “unsustainable without earnings support.”
Inflation and Interest-Rate Shadows
Despite moderating inflation, the Federal Reserve has signaled that interest rates will likely remain elevated well into 2026. Analysts fear that could erode corporate profits and consumer spending, particularly if wage growth stalls.
Goldman’s Solomon warned that many investors were “pricing in perfection” even as data show cooling job creation and slower consumer demand.
