Wall Street is turning cautious on US stocks, while some experts warn of pain ahead. Here’s what JPMorgan, Jeremy Grantham and others have said.

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  • Investors are turning increasingly wary of what the end of 2023 brings for stocks and the US economy.

  • Wall Street banks including JPMorgan and Bank of America Merrill Lynch are turning more defensive in their investing approach.

  • Here’s what six top voices have said about US stocks as 2023 swings toward its final quarter.

There’s a growing sense of caution in the US stock market about the economy as 2023 swings toward its final quarter – and it’s fostering a more defensive approach among investors.

It’s a shift of mood from the first half, when investors cheered the rise of artificial intelligence – and what the groundbreaking technology could mean for productivity and corporate profits.

The S&P 500 share index is on track for its first two-month decline in a year, with investors worrying that a combination of high interest rates, dwindling household savings, and rising consumer debt could bring bad news for stocks and the wider economy.

Among those adopting a more cautious investment approach include Wall Street banks such as JPMorgan and Bank of America. Experts such as John Hussman, the notorious market bear who predicted the 2000 and 2008 crashes, also recently warned of pain ahead for stocks, urging them to “buckle up.”

Here is a selection of the latest market commentary from six top voices who have turned relatively downbeat in their outlooks.


  • “US earnings are contracting, and consensus expectations for next year appear too optimistic given an aging business cycle with very restrictive monetary policy, rising cost of capital, lapping of very easy fiscal policy, eroding consumer savings and household liquidity, and elevated risk of a recession,” strategists at the biggest US bank wrote in a recent research note.

  • “As such, we stay defensive in our model portfolio, with an UW (underweight) in equities and credit vs. OW (overweight) in cash and commodities,” they added.

Bank of America Merrill Lynch

  • “Lately investors have been responding positively to data that suggests the economy is weakening. Central to this “bad news is good news” dynamic is a belief that a softening economy will lead to cooling inflation, which will be met by easier central bank policy and lower interest rates In our view, this trend won’t last forever,” strategists at the bank said in a note seen by Insider.

  • “We see a number of scenarios that could develop over the next several months that may alter the way economic data is interpreted, potentially adding to market choppiness throughout the balance of the year,” they added.

  • “Our base case is for a choppy, grind-it-out market environment to persist for the remainder of the year. Against this backdrop, from an investment perspective, we continue to favor a disciplined approach that emphasizes diversification across asset classes,” the strategists wrote.

John Hussman, president of Hussman Investment Trust

  • “If recession was to begin in Q4, the time to buckle up would be right now. Not measurable in real time, but the worst equity market outcomes begin ~2 months prior to recession until ~4 months prior to recovery,” Hussman said in a recent post on X.

Ken Griffin, Citadel CEO

  • “I’m a bit anxious that this rally can continue,” the billionaire hedge-fund manager told CNBC’s “Squawk on the Street” Thursday.

  • “Obviously one of the big drivers of the rally has been … just the frenzy over generative AI, which has powered many big tech stocks. I like to believe that this rally has legs, I’m a bit anxious we’re in the seventh or eighth inning of this rally,” he added.

Mike Wilson, Morgan Stanley’s stock chief

  • “The S&P 500 risk/reward today is one of the worst I’ve ever seen, given the earnings setup that we see in front of us combined with the valuation that we have today,” Wilson said during a recent Rosenberg Research webcast.

  • “The cracks are forming,” he said. “They’re all over the place, which is why people are cramming into a handful of stocks,” he added.

Jeremy Grantham, veteran investor

  • “A dozen giant American stocks have had a hell of a run on the back of AI, and that has certainly created the impression that it’s game over,” Grantham said, during an investor event held by Livewire Markets in Sydney this week.

  • “The problem is prices are incredibly high and basically the economy is beginning to unravel,” the cofounder of asset manager GMO added. “So it’s a head fake, but it’s a hell of a head fake.”

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