Bull market hasn't started, Fed pause could awaken bear: Morgan Stanley

That turning point could happen as the Fed is expected to pause rate hikes at their policy meeting on Wednesday, which commentators have said would beThough a Fed pause is likely to move equities higher, the upside will be temporary, Wilson suggested, calling a potential pause in interest rates the"perfect book end" to the bear market rally.

"With the S&P 500 rally now crossing the 20% threshold, more are declaring the bear market officially over. We respectfully disagree due to our 2023 earnings forecast. Ironically, a Fed pause may awaken the bear tactically just as liquidity headwinds ramp up," Wilson said. Corporate profits will post a 16% decline this year, Morgan Stanley strategists predicted, before seeing a sharp 23% rebound in 2024.

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