Some of Wall Street’s biggest firms are warning clients to prepare for a major market pullback as sky-high equity valuations slam into souring US economic data.
How big? Maybe 15%. Morgan Stanley, Deutsche Bank and Evercore all cautioned that the S&P 500 Index is due for a near-term drop thanks to the darkening economic picture. Driving concern is the expanding fallout from President Donald Trump’s trade war, including slowing consumer spending, diminished economic growth, rising unemployment and potentially reignited inflation.
On Monday, dip buyers moved in to pick up the pieces from Friday’s tariff- and data- driven bloodbath. But looking further ahead, Morgan Stanley strategist Mike Wilson sees a correction of up to 10% this quarter as Trump’s policies put more pressure on consumers and corporate balance sheets. Evercore’s Julian Emanuel is expecting a more substantial decline—as much as 15%.
Now, with that said, there was already a growing consensus that—at the very least—a small drawdown in equities is overdue given the tear they’ve been on. Moreover, it’s August, and you know what that means. Over the past three decades, the S&P 500 has performed the worst in August and September, losing 0.7% on average in each month, compared with a 1.1% gain on average across other months, according to data compiled by Bloomberg. —Natasha Solo-Lyons
Tesla approved an interim stock awardworth about $30 billion for Chief Executive Officer Elon Musk, a massive payout meant to keep the voluble multibillionaire’s attention on the automaker as a legal fight over a 2018 pay package drags on.
The new agreement includes 96 million shares of Tesla (which had more bad news from China on Monday) that will vest if Musk continues to serve in the top post for another two years, the company said in a regulatory filing. The restricted stock has an exercise price of $23.34, equal to the price in the prior compensation plan.
Palantir’s unstoppable rally the past year has yielded more than sixfold gains for investors and created monumental wealth for its founders and early employees. As the stock climbs to another all-time high, it’s made Chief Technology Officer Shyam Sankar a billionaire, joining four Palantir co-founders whose stakes have also grown to 10 figures or more, helped along by the return of Trump to the White House.
A year ago, Eli Lilly was poised to become the first pharmaceutical company to register a trillion-dollar market valuation. It still hasn’t cracked that ceiling. Instead, a series of weak earnings reports, a setback for its obesity drug and threats of sky-high tariffs have taken Lilly investors on a wild ride only to deposit them almost exactly where they started.
US college endowments overseeing $500 million or more posted median returns of 11.5% for the year through June, the best performance since 2021. All endowments including smaller funds gained a median 10.8% before fees during the same period, according to a report Monday from the Wilshire Trust Universe Comparison Service.
The firm, which gathers data from institutional investors including pensions and endowments, doesn’t name individual colleges. Meanwhile, as a growing number of the wealthiest US colleges capitulate to the Trump administration, which has been using threats of defunding and litigation to exert control over higher education, the strain from lost and frozen federal cash is putting pressure on the remaining holdouts to cut a deal.
New York City air quality is dropping as Canadian forest-fire smoke swirls down the Hudson River, shrouding much of the eastern half of the continent in a dangerous haze. Air-quality alerts have been posted in New York City, with 740 fires raging across Canada from the Arctic Circle to southern Ontario. In the US, the warnings reach from Minnesota to Maine, while in Canada bulletins have been posted from the Northwest Territories to Quebec.
Smoke from Canadian wildfires blanketing New York City last week. Photographer: Thomas Hengge/AP Photo
