diff --git a/scanpy/plotting/_anndata.py b/scanpy/plotting/_anndata.py
index a904a0778..9c31fc735 100755
--- a/scanpy/plotting/_anndata.py
+++ b/scanpy/plotting/_anndata.py
@@ -271,15 +271,14 @@ def _scatter_obs(
     palette_was_none = False
     if palette is None:
         palette_was_none = True
-    if isinstance(palette, cabc.Sequence):
+    if isinstance(palette, cabc.Sequence) and not isinstance(palette, str):
         if not is_color_like(palette[0]):
             palettes = palette
         else:
             palettes = [palette]
     else:
         palettes = [palette for _ in range(len(keys))]
-    for i, palette in enumerate(palettes):
-        palettes[i] = _utils.default_palette(palette)
+    palettes = [_utils.default_palette(palette) for palette in palettes]
 
     if basis is not None:
         component_name = (
@@ -372,8 +371,7 @@ def add_centroid(centroids, name, Y, mask):
         centroids[name] = Y_mask[i]
 
     # loop over all categorical annotation and plot it
-    for i, ikey in enumerate(categoricals):
-        palette = palettes[i]
+    for ikey, palette in zip(categoricals, palettes):
         key = keys[ikey]
         _utils.add_colors_for_categorical_sample_annotation(
             adata, key, palette, force_update_colors=not palette_was_none
diff --git a/scanpy/plotting/_utils.py b/scanpy/plotting/_utils.py
index 0a6fa70d8..76639a81f 100644
--- a/scanpy/plotting/_utils.py
+++ b/scanpy/plotting/_utils.py
@@ -1,7 +1,7 @@
+from __future__ import annotations
+
 import warnings
 import collections.abc as cabc
-from abc import ABC
-from functools import lru_cache
 from typing import Union, List, Sequence, Tuple, Collection, Optional, Callable, Literal
 import anndata
 
@@ -315,10 +315,12 @@ def savefig_or_show(
         pl.close()  # clear figure
 
 
-def default_palette(palette: Union[Sequence[str], Cycler, None] = None) -> Cycler:
+def default_palette(
+    palette: Union[str, Sequence[str], Cycler, None] = None
+) -> str | Cycler:
     if palette is None:
         return rcParams['axes.prop_cycle']
-    elif not isinstance(palette, Cycler):
+    elif not isinstance(palette, (str, Cycler)):
         return cycler(color=palette)
     else:
         return palette
diff --git a/scanpy/tests/_images/scatter_HES_percent_mito_bulk_labels/expected.png b/scanpy/tests/_images/scatter_HES_percent_mito_bulk_labels/expected.png
new file mode 100644
index 000000000..0ddd02eb9
Binary files /dev/null and b/scanpy/tests/_images/scatter_HES_percent_mito_bulk_labels/expected.png differ
diff --git a/scanpy/tests/test_plotting.py b/scanpy/tests/test_plotting.py
index a51b37860..cd1919b8c 100644
--- a/scanpy/tests/test_plotting.py
+++ b/scanpy/tests/test_plotting.py
@@ -1233,12 +1233,21 @@ def test_scatter_specify_layer_and_raw():
         sc.pl.umap(pbmc, color="HES4", use_raw=True, layer="layer")
 
 
-def test_scatter_no_basis_per_obs(image_comparer):
+@pytest.mark.parametrize("color", ["n_genes", "bulk_labels"])
+def test_scatter_no_basis_per_obs(image_comparer, color):
     """Test scatterplot of per-obs points with no basis"""
     save_and_compare_images = image_comparer(ROOT, FIGS, tol=15)
     pbmc = pbmc68k_reduced()
-    sc.pl.scatter(pbmc, x="HES4", y="percent_mito", color="n_genes", use_raw=False)
-    save_and_compare_images("scatter_HES_percent_mito_n_genes")
+    sc.pl.scatter(
+        pbmc,
+        x="HES4",
+        y="percent_mito",
+        color=color,
+        use_raw=False,
+        # palette only applies to categorical, i.e. color=='bulk_labels'
+        palette='Set2',
+    )
+    save_and_compare_images(f"scatter_HES_percent_mito_{color}")
 
 
 def test_scatter_no_basis_per_var(image_comparer):