Stocks likely aren't poised for a massive rally despite Federal Reserve Chairman Jerome Powell signaling an interest rate cut is coming soon, according to a top market strategist.
"We're not convinced it's up, up and away," Wells Fargo Investment Institute's Scott Wren told CNBC's "Fast Money" on Wednesday.
Wren said future updates from the Trump administration on the United States' trade war with China is likely to pressure stocks in the near term. Washington and Beijing are currently working to iron out a deal after President Donald Trump and Chinese President Xi Jinping agreed late last month at the G-20 summit in Japan not to levy new tariffs.
"There's going to be a trade deal. We think it's pretty far out," said Wren, the firm's senior global equity strategist. "We think we're going to see some pretty negative trade headlines in the coming months."
Despite potential negative trade headlines, Wren said the firm likes certain sectors, such as consumer discretionary, industrials and technology. "We're not completely neutral. We're in it," he said.
Stocks reached record highs Wednesday after testimony from Powell bolstered the case for easier monetary policy in the U.S. In testimony before the House Financial Services Committee, Powell said business investments across the U.S. have slowed "notably" recently as uncertainties over the economic outlook linger.
"Many [Federal Open Market Committee] participants saw that the case for a somewhat more accommodative monetary policy had strengthened," he added.
It's widely expected the Fed will cut interest rates this month. Traders have priced in a 100% probability of a Fed rate cut in July, according to the CME Group's FedWatch tool.
— CNBC's Fred Imbert contributed to this report.