Wall Street warns investors to get ready for stocks to drop

A chorus of stock market prognosticators at some of Wall Street's biggest firms is warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data.

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NEW YORK -

On Aug 4, Morgan Stanley, Deutsche Bank and Evercore ISI all cautioned that the S&P 500 Index is due for a near-term drop in the weeks and months ahead.

The predictions come after a furious rally from April's lows that propelled the gauge to levels it has never seen before.

Morgan Stanley strategist Mike Wilson sees a correction of up to 10 per cent this quarter as tariffs hit consumers and corporate balance sheets.

Evercore's Mr Julian Emanuel is expecting a more substantial decline of as much as 15 per cent.

A team at Deutsche Bank led by Mr Parag Thatte notes that a small drawdown in equities is overdue, considering they have been on a tear for more than three months.