(Bloomberg) -- Top Wall Street strategists said the record-setting US stock rally risks temporarily running out of steam after an expected Federal Reserve interest-rate cut this week.

Strategists from Morgan Stanley, JPMorgan Chase & Co. and Oppenheimer Asset Management warned that a more cautious tone may replace the bullish mood as investors focus instead on a potential economic slowdown.

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Expectations of Fed easing have provided much of the latest impetus for the S&P 500, which is near a record high. Concerns are increasing, though, that a 25 basis-point cut on Wednesday won’t go far enough to address a slowing US labor market. Investors are also still trying to gauge the impact of tariffs on inflation, which remains above the Fed’s 2% target.

“Near-term risk is centered on the tension between lagging, weak labor data and the Fed’s response that may not meet the markets’ ‘need for speed,’” Morgan Stanley’s Michael Wilson said. Still, he recommended buying any dips, and his most bullish scenario sees the S&P 500 climbing 9% to 7,200 points by mid-2026.

JPMorgan strategists said that while the stock market has disregarded weak indicators to post multiple record highs, this trend could reverse once the Fed makes its first cut of 2025.

“Once the easing resumes, equities could turn more cautious for a bit, and price in some more downside risk, in effect repricing the current, potentially complacent, stance,” a team led by Mislav Matejka wrote.

The warnings are at odds with broader bullishness on US stocks. The S&P 500 has risen 12% this year, powered by gains in Big Tech. A slate of strategists including at Deutsche Bank AG and Barclays Plc raised their year-end targets for the S&P 500 this month, citing robust corporate earnings and the buzz around artificial intelligence.

At Oppenheimer AM, too, Chief Investment Strategist John Stoltzfus said any declines after the Fed’s rate cut are likely to be limited both in scale and duration, as long as the fundamentals of the US economy remain resilient.

“Should the Fed opt to ease by just 25bps as most expect, the market might sell somewhat lower on the news after having bid stocks to new records in anticipation and expectation of such a rate cut,” he wrote in a note.

--With assistance from Sagarika Jaisinghani and Augusta Saraiva.

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