The is in for an 8 percent pullback by the end of the summer, Deutsche Bank's chief U.S. equity strategist said Thursday.
"We never get through a year without a 5 percent-plus dip in the S&P. I don't think this is going to be a year that avoids that," David Bianco told CNBC's "Squawk Box," noting there have been just three exceptions to the rule since 1960.
Deutsche Bank foresees the pullback coming this summer because it believes weakness in investment spending is not a transitory factor, particularly in the commodity complex and other types of globally related investment.
Energy and commodity companies have reduced capital expenditure spending as the cost of crude has roughly halved and amid broader weakness in commodities.
That draw down in investment spending will weigh on S&P 500 earnings, Bianco said, and more investors will come to terms with flat profits and negative revenues. He believes second quarter earnings will be even worse compared to last year.
China will also continue to decelerate, and any stimulus measures taken by the Chinese central bank will only serve to control that deceleration, rather than spur re-acceleration, he said.
Still, Deutsche Bank believes the Federal Reserve will raise its benchmark interest rate—which has been near zero since December 2008—leading to a stronger dollar and a limited commodity price rebound. The central bank has said its decision to raise rates will depend on economic data.
"I don't like what I see developing in the market. The past few weeks, the reflation trade is on," he said. "All of a sudden some investors believe the Fed's not going to hike, the dollar is going to weaken, commodity prices are going to rally, and they're positioning for this growth in inflation, not so much real growth, but inflationary pressures accelerating."
If the Fed doesn't hike rates, it would lead to further confusion about the direction of the dollar and long-term interest rates, he said.
In a separate appearance on "Squawk Box," UBS deputy chief economist Drew Matus said the Fed is holding back the economy by keeping interest rates near zero, and the central bank should pull the trigger regardless of recent disappointing economic data.
"They had June lined up in their sights as of March, and they should have just said, 'You know what? We're going, and we understand Q1's going to be weak. And that's just a temporary blip, and we're going to move ahead with this,'" Matus said.
"I think everything would be functioning a lot better now. I think people would be more confident in the outlook going forward."
In its statement Wednesday following a two-day meeting, the Federal Reserve Open Market Committee removed all calendar references and showed no new guidance on the timing of a rate hike.
The Fed announcement came after an initial reading of first quarter GDP showed the U.S. economy grew at just 0.2 percent, compared with a consensus estimate for 1 percent growth.
"You're never going to get the perfect time to hike rates," Matus said. "There will always be some crazy guy in some other country doing something that makes you nervous. There will always be some financial issue. There will be some equity market index moving the wrong way that you would prefer move the other way."
Failing to raise interest rates will keep the United States in a "suboptimal world," he said.
Matus acknowledged that an initial quarter-point rate hike will not spur much change, but said it's a signal that interest rates will not sit at zero percent forever.
"That's something that a lot of clients, a lot of market participants, are believing. Every time we get to the point where the Fed is going to hike rates, the Fed will blink and push it back, because this is what we've seen with this Fed," he said.
As rates begin to rise, people will extend the duration of their investments and companies will be more inclined to invest in back into their business rather than returning cash to shareholders, Matus said.
Read MoreFed: All calendar references removed
Supporters of the Fed's monetary policy often say growth could slow sharply and employers may prematurely curtail hiring, effectively ending economic recovery, if the cost of borrowing increases too soon.
Matus questioned whether zero-interest rate policy will look sound when viewed through the lens of history.
He said the savings rate should be going down because no one will put away money to get a zero-percent return, and consumption should increase as people buy big ticket items with cheap financing. Capital expenditures should also be ramping up because returns on investment are high, he added.
"None of those things are happening, and yet we're not questioning the basic premise of why rates at zero are good for the economy," he said.
—CNBC's Evelyn Cheng contributed to this report.