They say what goes up must come down, but if you’re the current stock market, coming down has taken a wild turn that may be on the cusp of straightening out.

“We think this is the time for consolidation of the gains,” Morgan Stanley's closely-watched chief investment officer Mike Wilson told Yahoo Finance executive editor Brian Sozzi on his Opening Bid podcast (see video above or listen here).

Wilson believes stocks are headed for a 10% correction in the third quarter, on the back of thin summer trading volume and yawning worries about the presidential election in November.

By and large, the market has side-stepped correction calls from Wall Street for much of the year.

The S&P 500 is up 14% year to date amid strong corporate earnings and anticipation of interest rate cuts this fall. The Nasdaq Composite is up 13% this year, powered by AI optimism. And the Dow Jones Industrial Average has clocked in with a respectable 6% advance.

But cracks are emerging in the bull thesis.

The Nasdaq has been hit by almost 3% in the last five trading sessions due to valuation concerns, mixed results from Alphabet (GOOG, GOOGL), and outright poor earnings figures from Tesla (TSLA).

Market darling Nvidia (NVDA) has dropped by more than 5% in the past five days, while rival AMD (AMD) has shed around 10%.

Over the past 10 days, the S&P 500 is down about 3%, while the Nasdaq is down more than 6%.

Wilson fancies those cracks may spread and weigh further on stocks in the near-term.

He points to the ISM Manufacturing Index remaining “in contraction territory.” Manufacturing woes is lessening, but services, which is still 70% of the economy, is now weakening "substantially.”

“Where we are is a late [economic] cycle still," Wilson adds.

With economic growth deteriorating, Wilson notes, stock multiples go up “because of the hope for the Fed to ease policy.” That's an unwelcome backdrop for investors to wade into stocks, Wilson says.

And so is the fact the government is spending “gobs of money on fiscal policy to keep things moving along."

The AI sell-off could also rage on, hurting broader market sentiment further.

“We’re believers that AI will lead to productivity increases over time, but expectations got ahead of the timing of this development,” Wilson said.

Wilson isn't alone in bearish on the short-term.

Veteran strategist Keith Lerner of Truist says the "corrective period" in tech has further to go. He downgraded his views on tech stocks in June.

Adds Lerner, "This choppier market action of late is consistent with our expectations, and is set to continue. Our base case is that the longer-term bull market remains intact, but it’s often two steps forward, one step back."

Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled, market-focused conversations and chats with the biggest names in business on Opening Bid. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.

In the below Opening Bid episode, EMJ Capital founder Eric Jackson makes his case for a doubling in Nvidia's stock price despite valuation concerns.

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