(Bloomberg) -- The stock market is witnessing the start of a downdraft that will run through the rest of 2024 after retreating from an all-time high hit last month, according to Evercore ISI’s Julian Emanuel.

The firm’s chief equity and quantitative strategist reiterated his S&P 500 Index target of 4,750 before the year ends, implying another 6% drop from Wednesday’s closing level of 5,022. Stalling progress on inflation, uncertainty around when the Federal Reserve will cut interest rates, and election volatility in the second half of the year are poised to pressure the stock market, in his view.

“As a strategist, it is an uncomfortable place to be to have a target below the market, but our work continues to lead us in the same direction,” Emanuel said in an interview. “Valuations are very, very taxing and the forward returns at these valuations tend to be subpar.”

The average pullback in a non-recession year is 13%, Emanuel added, pointing to stickier cost pressures and monetary policy that is “more of a question mark” as catalysts for further declines. He also expects a “very contentious political election” to shift consumer attention away from spending as they focus on making a decision on who to vote for.

US stocks extended losses into a fourth-straight session on Wednesday, a losing streak not seen since the start of January. After a 22% rally in the S&P 500 from late-October lows, sentiment has waned as investors see little room for further gains, worsened by a bevy of lackluster earnings results and hawkish signals from the Federal Reserve. Despite hitting a record on March 28, the broad equities benchmark is actually down 1.5% since the end of February.

But even though Emanuel says bias is toward the downside, particularly with the election in the second half of the year, he still plans to be a buyer when the S&P 500 tests levels around his target price.

“Part of the story that got us — particularly in the momentum stocks — as overextended as we were at peaks in March, was that the public was an incredibly enthusiastic player in equity markets who saw some record flows,” Emanuel said. “We now think this is an environment where people are going to temper their optimism and do a little bit of reset.”

“Ultimately, you’re going to get what has powered all bull markets over the course of the last 35 years,” he added. “A good solid dip-buying opportunity.” 

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