Morgan Stanley warns stock market is still 'far from out of the woods'

The sizable rally in theover the past month is likely to fizzle out as higher interest rates take a toll on the U.S. economy, according to Morgan Stanley.

Michael Wilson, the chief U.S. equity strategist at Morgan Stanley and a longtime Wall Street bear, said in an analyst note on Monday that the Federal Reserve's aggressive tightening campaign that contributed to a spate of bank collapses in March could trigger other surprising problems. "If there is one thing that can throw cold water on the large mega-cap rally, it’s higher yields due to a Fed that can’t stop hiking," Wilson wrote in the note. to lift the benchmark federal funds rate nine times over the past year, and has opened the door to a 10th rate hike during its next meeting in early May despite recent turmoil in the financial sector and signs of a slowdown in the broader economy.There are other concerning developments in the market, according to Wilson.

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'Gradually, then suddenly.' Earnings expectations may be about to drop, says Morgan Stanley strategist.Morgan Stanley's Mike Wilson is worried that investors have waved an all-clear to fallout from the banking crisis. But as long as those ESG scores are looking good, that’s all that matters. It’s what’s really important to the shareholders But someone I respect more than Wilson said the opposite? All these talking heads... go figure.
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