Traders should brace for a correction in the stock market as uncertainty swirls around the US presidential campaign, corporate earnings and Federal Reserve policy, according to Morgan Stanley’s Mike Wilson.

“I think the chance of a 10% correction is highly likely sometime between now and the election,” Wilson said in an interview with Bloomberg Television Monday. The third quarter is “going to be choppy.”

The S&P 500 Index opened the week at all-time highs and will hit its 35th closing record this year if it closes Monday in the green. Expectations that the Fed will cut rates twice this year and excitement around artificial intelligence have propelled the benchmark to a 17% gain this year after its 24% surge in 2023. Indeed, even a long-time bear like Wilson has tempered his tone from the past few years.

But a rising number of Wall Street pros have begun to grow cautious heading into the third quarter, a seasonally turbulent period, particularly amid signs the rally is overhearing.

Goldman Sachs Group Inc.’s Scott Rubner said Monday that he’s modeling a painful two-week stretch starting in August if corporate earnings disappoint. Andrew Tyler at JPMorgan Chase & Co.’s trading desk said he’s bullish with “slightly less conviction” from recent weakening economic data. And Citigroup Inc.’s Scott Chronert has sounded the alarm on a potential pullback.

“Your likelihood of upside from now until year end is very low, much lower than normal,” Morgan Stanley’s Wilson said, placing the odds of stock prices closing the year higher than they are now at 20% to 25%.

However, Wilson isn’t particularly concerned about a pullback. Rather, he said it could create opportunities for investors to buy in since valuations are currently “unexciting” after the S&P 500’s double-digit gain this year. At the moment, the best way to play the stock market is through individual stocks rather than indexes, he said.

Wilson and his team continue to recommend high-quality growth names, and quality in general: large-caps, companies with good balance sheets, and those that can deliver on earnings. Momentum will continue, but the problem is it’s hard to find shares in those categories that are cheap, he said.

“If they were to come in 10%, then we’d probably get interested again,” he said.

This article was provided by Bloomberg News.