Sou Hu Cai Jing·2025-08-05 10:23Group 1 - Major financial institutions like Morgan Stanley, Deutsche Bank, and Evercore ISI have issued warnings about the current valuation of the U.S. stock market, suggesting a potential significant correction is imminent [1][3][4] - The S&P 500 index has risen over 20% since its low in April, driven by trends such as artificial intelligence, declining inflation expectations, and bets on Federal Reserve rate cuts, but recent economic data raises concerns [3][4] - Morgan Stanley's chief strategist Mike Wilson predicts a possible decline of up to 10% in the S&P 500 index due to rapid market gains, while Evercore ISI suggests a more aggressive correction of 15% [3][4] Group 2 - Deutsche Bank highlights that the stock market's nearly one-sided rise over the past three months indicates a short-term adjustment is imminent, with investor confidence and positioning levels nearing extremes [4] - The current valuation increase is not supported by broad earnings growth, as significant capital has flowed into a few tech-heavy stocks, creating structural vulnerabilities in the market [4] - Some analysts believe the upcoming correction may be more of a technical adjustment rather than a trend reversal, but market sentiment often shifts when investors are least vigilant [4][5] Group 3 - The market is pricing in at least one rate cut from the Federal Reserve this year, contingent on a "moderate slowdown" in the economy rather than a sudden halt [5] - If employment or consumer data continues to deteriorate without action from the Federal Reserve, the market may reassess the likelihood of a "soft landing," which could lead to volatility [5] - Vatee suggests that the next few trading weeks will be crucial in determining the sustainability of the current bull market, urging investors to focus on fundamentals and prepare for potential fluctuations [5]