Tom Lee, a prominent equity strategist, has shifted to a cautious stance, anticipating a 7%-10% market pullback in the coming weeks.

What Happened: Lee, co-founder and head of research at The Fundstrat who has been accurately bullish on the market, now foresees turbulence over the next eight weeks. He attributes this potential decline to historical trends, noting that September has historically been the weakest month for stocks.

The Stock Trader's Almanac indicates the S&P 500 has averaged a 0.7% loss every September since 1950, reported CNBC.

"I think investors should be cautious for the next eight weeks," Lee said.

Lee advised investors to be cautious but ready to capitalize on potential buying opportunities. He cited several factors that could contribute to market volatility, including the upcoming August jobs report and the possibility of a hotter-than-expected data release, which could affect the Federal Reserve's rate cut expectations.

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

Lee highlighted that the market has been strong, rising in seven of the past eight months, but warned that upcoming events like the September rate cuts and the election could induce nervousness among investors. He remains optimistic about buying opportunities during any pullback.

Why It Matters: September is historically a challenging month for the stock market. The month is notorious for disrupting market momentum and causing heightened volatility.

Recently, Adam Turnquist, chief technical strategist for LPL Financial, notes that "seasonal weakness in September could spoil the momentum" built earlier in the year.

Adding to the complexity, Federal Reserve Chairman Jerome Powell hinted at potential rate cuts during his speech at Jackson Hole on Aug. 23, traders are anticipating these cuts, which could further influence market dynamics.

However, a recent cautionary note from JPMorgan suggests that these anticipated rate cuts may not significantly boost the stock market. The Federal Reserve may start easing rates more reactively, which could impact investor sentiment.

Additionally, the performance of major stocks like Nvidia Corp. (NASDAQ:NVDA) has been under scrutiny. Nvidia has seen a significant decline, losing the value of McDonald's, Disney, and Coinbase combined since its second-quarter earnings.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote