Stocks are entering a danger zone as they're already pricing in a Fed pause, top Morgan Stanley strategist says

• Stocks' strong rally this year may not last much longer, Morgan Stanley Wealth Management says.
• "We are entering a dangerous phase," CIO Lisa Shalett said in a recent research note.
• Good news that could potentially extend the rally has already been priced in, she added.

Stock-market valuations look perilous right now, as investors have already priced in potential good news that could have sparked future rallies, according to Morgan Stanley Wealth Management's top strategist.

CIO Lisa Shalett said Monday that markets have already factored in a Federal Reserve pause, falling inflation, and lower real interest rates – making it unlikely that equities will achieve further gains.