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Jeff Gundlach sees summer correction in the stock market

Interest rates should rise and stocks should temporarily fall this summer, said noted investor, Jeffrey Gundlach.

Gundlach expects the 10-year Treasury yield to move higher, and a summer interest rate rise should "go along with a correction in the stock market."

"I think it's more likely that equities drop when yields are rising," he said in response to a separate question.

Gundlach is the Chief Executive Officer of DoubleLine and was speaking on a "Closed-End Funds Audio Webcast" Tuesday after the market close to discuss the DoubleLine Opportunistic Credit Fund (DBL) and the DoubleLine Income Solutions Fund (DSL), which DoubleLine is an advisor to.

The U.S. 10-year Treasury yield was last near 2.28 percent, down from 2.432 percent at the end of last year.

The S&P 500 has not fallen more than 10 percent from a recent high — or fallen into a correction — since February 2016.

Still, "we have no recession in sight. 2Q GDP has a tendency to bounce back," Gundlach said. "So far, the Nasdaq has been more right about the economy than the 10-year which I think has been rallying more on technicals."

U.S. first quarter GDP reported its slowest pace in three years, while the Nasdaq composite closed at a fresh record Tuesday.

Gundlach also said he expects gold to "have another leg up" and oil prices to trend lower over the longer term because of improved technology for extraction.

"Commodities broadly should underperform CPI because" of technology, he said.

Watch: Gundlach says no recession coming at all