Morgan Stanley warns that the stock market isn’t done tumbling.

The Wall Street firm believes equities’ failure to break out last week is a sign that September’s pullback could continue at least through the election in two weeks, CNBC reported.

“With so many uncertainties over the next month, we think another 10% correction from Monday’s highs is the most likely outcome in the near term before this bull market can resume,” Morgan Stanley chief U.S. equity strategist Mike Wilson told clients.

The S&P 500 is down 1.86% from Monday’s high of 3,549.85, which means stocks could fall more than 8% before the correction is over, CNBC explained.

Wall Street's main indexes closed lower on Monday as Washington lawmakers still appeared to struggle to reach an agreement on coronavirus stimulus ahead of a Tuesday deadline that would make a relief package possible ahead of the Nov. 3 elections.

Investors were also worried about rising coronavirus cases in parts of the United States and about whether U.S. President Donald Trump might end up contesting the election results, Reuters reported.

"The lack of news on stimulus is worrisome compounded by worsening virus trends and uncertainty ahead of the elections," said Mona Mahajan, U.S. Investment Strategist, Allianz Global Investors, New York.

Last week, the White House proposed a $1.8 trillion stimulus package that Pelosi rejected because it fell short of her demand for $2.2 trillion in aid.

"There's a decent case that regardless of who wins if stimulus doesn't happen before the election it'll happen afterward," said Mahajan but she added, "with (virus) cases rising again stimulus will be important."

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