Investors should brace for a sharp selloff in US stocks within months, as earnings outlook downgrades cause prices to plunge, Morgan Stanley's investment chief has warned.

The S&P 500 could decline to 3,000 points in the early months of 2023 — the bank's bear case for the period, chief US equity strategist Mike Wilson told CNBC Tuesday.

If the benchmark stock index does slump that low, it will represent a 24% decline from Tuesday's closing level of 3,958.

"You should expect an S&P between 3,000 and 3,300 some time in probably the first four months of the year," he said. "That's when we think the deceleration on the revisions on the earnings side will kind of reach its crescendo."

Wilson is expecting fears of looming recession to cause major publicly listed companies to lower their earnings targets, meaning that stocks would remain in the bear territory where they have spent most of this year.

"The bear market is not over," Wilson said. "We've got significantly lower lows, if our earnings forecast is correct."

The S&P 500 has shed 17% year-to-date as concerns about recession, the Federal Reserve's aggressive interest rate hikes, and Russia's invasion of Ukraine rattled investors' confidence.

Wilson believes the index will finish 2023 trading close to its current level of around 3,900. But the strategist noted that end-of-year targets for indexes now mean little to investors, given the high level of volatility in markets.

"Nobody cares about what's going to happen in 12 months — they need to deal with the next three to six months," he said. "That's where we actually think there's a significant downside."

"So, while 3,900 sounds like a really boring six months — no, this is going to be challenging. It's going to be a wild ride."

Lower earnings could cause significant pain for larger-cap stocks, Wilson said.