Tom Lee, who’s been correctly bullish, turns cautious and sees 7%-10% pullback

Equity strategist Tom Lee expects the stock market will run into some turbulence over the next eight weeks, though he expects a pullback could be a buying opportunity for investors. Lee stocks could pull back by 7% to 10%, as investors navigate what’s historically the weakest month of the year. The Stock Trader’s Almanac shows the S & P 500 has averaged a 0.7% loss every September in data going back to 1950. “I think investors should be cautious for the next eight weeks,” Lee told CNBC’s “Squawk Box” on Tuesday. “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 will get people nervous.” “I think in the next eight weeks, people get a chance to buy,” Lee continued. “So, I think it’s good to be cautious, but just ready to buy that dip. The Fundstrat co-founder and head of research worries one possible catalyst for some volatility could come Friday with the release of the August jobs report, after the disappointing July nonfarm payrolls number revived growth fears and led to the Aug. 5th sell-off. But the strategist is concerned the August data could come in hotter than expected, an outcome that could take the September rate cut out of investors’ expectations. Markets are pricing in a 67% likelihood that the Federal Reserve will cut by a quarter percentage point in September, according to the CME FedWatch Tool. With the others seeing a chance of a half-point cut. Lee was one of the first on Wall Street to turn bullish on stocks during the depths of the pandemic and was correctly bullish heading into 2024 as well. He’s made some bold short-term calls this year, including predicting a rotation into small cap shares.