Investors hoping for a boost to stocks by the end of the year will be disappointed, according to Morgan Stanley’s Michael Wilson.

“Chances of a fourth-quarter rally have fallen considerably,” said Wilson, who was once again named as the best portfolio strategist by the latest Institutional Investor survey. “Narrowing breadth, cautious factor leadership, falling earnings revisions and fading consumer and business confidence tell a different story than the consensus, which sees a rally into year-end.”

Wilson’s bearish view on equities has been unfolding over the past three months as investors fret about the impact of higher-for-longer interest rates. The S&P 500 entered a technical correction on Friday amid rising volatility and hotter inflation numbers, with the benchmark closing 10% below a recent peak.

Investors are now looking to guidance from the ongoing earnings season to assess the outlook for profits and how companies are able to withstand headwinds like higher rates.

Profit expectations are “too high for the fourth quarter and 2024, even in an economy that’s performing well,” Wilson said. Monetary and fiscal policy are unlikely to provide relief and could tighten further, while weak breadth — referring to the amount of stocks gaining — reflects how earnings remain at risk for most companies.

The strategist said the stock market is taking notice that the impact of Federal Reserve tightening is just starting to be felt across the economy, with interest rate-sensitive stocks underperforming in recent months while defensive sectors start to outperform with energy.

“This performance backdrop reflects a market that is incrementally more concerned about growth than higher interest rates and valuations per se,” he said.