Why stocks could drop 10% over the next 8 weeks, according to a bullish forecaster who's nailed his calls this year

• Stocks could pull back as much as 10% in the next eight weeks, Fundstrat's Tom Lee said.
• He told CNBC that investors should be cautious ahead of Fed interest-rate cuts and the election.
• Lee says the sell-off will be an ideal time to buy the dip.

Stocks are facing a possible double-digit drawback in the next eight weeks as a slew of market-moving events temporarily challenge this year's gains, Fundstrat's Tom Lee told CNBC.

Lee suggested that the market could fall between 7% to 10%, and recommended that investors gear up for elevated turbulence.

"I think investors should be cautious for the next eight weeks," the typically bullish investor said. "Market's been up seven of the eight months this year. So we know it's an incredibly strong market. But we also have the September cuts, and we have the election: things that'll get people nervous."

That's partly a reference to the Federal Reserve's upcoming policy meeting in mid-September, during which the central bank is expected to slash interest rates by at least 25 basis points.

Analysts have separately indicated that the market might not welcome deeper cuts. Bank of America wrote on Tuesday that if the Fed had to cut by 50 basis points instead, this would likely be in response to elevated recession risk.

Friday's jobs report will determine the Fed's decision later this month, with some on Wall Street fearing it may come in weaker than expected. But Lee cited that a pullback could ensue even if it beats forecasts, as investors readjust interest rate outlooks.

"If it's too strong and investors worry and so the stock market's down Friday, I'd be buying that dip," he told the outlet.

Lee has been largely on the mark with his stock market calls in 2024, heading into the year as one of Wall Street's bullish forecasters. His optimism has been met in the form of an 18% year-to-date gain for the S&P 500 through Friday.

Meanwhile, election uncertainty may put off investors until the results are known, experts told Business Insider.

Even outside an election year, September is a challenging month for stocks in a non-election year. But when voters head to the polls, seasonal volatility can extend as far as mid-October. SoFi's Liz Young Thomas told the outlet.

There's a silver lining: investors can expect a relief rally once a president is chosen, she said.

Lee similarly cited that the "tough" weeks ahead should be viewed as a buying opportunity.

"I think in the next eight weeks, people get a chance to buy," he told CNBC. "I think it's good to be cautious, but just ready to buy that dip."

The strategist has been one of the market's staunchest bulls. In June, he argued that the S&P 500 could triple this decade, reaching 15,000 by 2030.