“Analyst warns of potential stock market disappointment as the Federal Reserve prepares to raise interest rates”

Investing.com – Stock market investors holding out hope that he will cut rates in the second half may be disappointed later this week, said Michael Wilson, an analyst with Morgan Stanley and one of the most vocal Wall Street pessimists.

The US central bank is expected to raise interest rates on Wednesday, marking the 10th consecutive increase dating back to March last year.

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“If the message the Fed sends to markets at this meeting is hawkish, it could be a near-term negative surprise for stocks,” Wilson wrote in a note.

Wilson added that the bond market may rebuild its interest rate cut expectations more in line with the Bank’s view of pausing policy tightening later this year if the Fed chairman’s comments justify it, which could be a negative surprise for stocks.

The benchmark S&P 500 index has risen over the past two months even amid banking sector turmoil and recession fears, as investors take comfort in corporate earnings and a moderate slowdown in the economy. However, Wilson said hopes for an earnings rebound in the second half of this year and throughout 2024 are exaggerated.

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