Morgan Stanley's chief strategist thinks investors are in for a bumpy ride after they realize there's no more Fed rate cut 'heroin'

U.S. Federal Reserve Chair Jerome Powell arrives for a press conference in Washington, D.C., the United States, on Dec. 14, 2022. (Credit: Liu Jie/Xinhua via Getty Images)

With inflation falling from its 40-year high in June, investors are betting the Federal Reserve will end its interest rate hiking cycle and “pivot” to rate cuts this year, juicing markets like they did in the past. But some top Wall Street strategists warn that the rosy outlook for stocks may be overly optimistic. 

Morgan Stanley’s chief investment officer and chief U.S. equity strategist, Mike Wilson, believes the Fed will keep rates higher for longer, and that corporate earnings will fall.