U.S. stock indexes rose on Wednesday following upbeat economic data and a rebound in the technology sector.
ADP data showed that the U.S. private sector added 42,000 jobs in October, surpassing expectations of 22,000, compared to a loss of 29,000 jobs in September.
Meanwhile, Wall Street heavyweights warned that global equity markets could face a potential sharp correction, cautioning against overstretched valuations in artificial intelligence-related stocks.
David Solomon, CEO of Goldman Sachs, said at the Global Financial Leaders’ Investment Summit in Hong Kong, “We’re likely to see a 10% to 20% pullback in equity markets over the next 12 to 24 months.” He added, “Markets move up and then they pull back so investors can re-evaluate.”
Solomon noted that such cyclical declines are a normal feature of long-term bull markets, emphasizing that Goldman’s consistent advice to clients remains to stay invested and review portfolio allocations rather than attempting to time the market.
“A 10% to 15% market drop happens quite often, even during periods of positive growth,” Solomon said. “It doesn’t change the underlying or structural convictions around how capital should be allocated.”
Ted Pick, CEO of Morgan Stanley, echoed the sentiment during the same panel, saying that investors should welcome market corrections as healthy developments rather than signs of a looming financial crisis.
“We should welcome the possibility of 10% to 15% pullbacks, as long as they’re not driven by major economic shocks,” Pick stated.
Their comments followed warnings from the International Monetary Fund (IMF) about the risk of a sharp correction, while Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey also expressed concern over excessive stock valuations.
As of 16:58 GMT, the Dow Jones Industrial Average rose 0.4% (175 points) to 47,260, the S&P 500 gained 0.7% (44 points) to 6,816, and the Nasdaq Composite advanced 0.9% (218 points) to 23,564.
