Morgan Stanley Chief Investment Officer Mike Wilson has just come out with a dire warning for the stock market. He believes that a 10% correction between now and the upcoming November presidential election is “highly likely.”

“Your likelihood of upside from now until year end is very low, much lower than normal,” said Wilson in an interview with Bloomberg. He added that the chances of the S&P 500 finishing the year above its current price is between 20% and 25%.

Wilson has emerged as a bearish voice in recent months. At the beginning of the year, he had a $4,500 price target for the S&P 500. However, he raised the price target to $5,400 last month following broad gains across the market. The S&P 500 is up by about 17% this year.

“[Macro] outcomes have become increasingly hard to predict as data have become more volatile,” wrote Wilson. “We see this environment persisting—a view that’s reflected in both our bull versus bear case skew (which is wider than normal) and our sector/style recommendations.”

Morgan Stanley’s Mike Wilson Believes a 10% Stock Market Correction Is “Highly Likely”

At the same time, Wilson believes that a 10% correction could create buyable opportunities. He suggests that investors should focus on individual stocks instead of market indices. More specifically, he recommends large-cap stocks with a healthy balance sheet and earnings growth.

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

At the beginning of the year, Wall Street analysts had a median 2024 S&P 500 price target of just $4,875. The median price target has since been lifted to $5,225, reflecting an increase of 7.18%.

Another catalyst on the way, expected to occur before the November election, is the first interest rate cut. A lower interest rate stimulates the economy by lowering the cost of borrowing money for both businesses and individuals.

CME’s FedWatch Tool notes that there is a 77.1% chance that the Federal Reserve will lower interest rates in September. There is a 73.6% chance of the Fed dropping rates by 25 basis points and a 3.5% chance of a 50 bps drop.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.