Strategist Jim Paulsen sees an S&P 500 peak this year but not before another nearly 10% rise

When rates go up, stocks go up: Jim Paulsen
When rates go up, stocks go up: Jim Paulsen

Despite an expected interest rate hike by the Federal Reserve this week, the stock market rally should remain intact ahead of peaking later this year, said Jim Paulsen, chief investment strategist at Wells Capital Management.

Paulsen told CNBC's "Squawk Box" on Monday that he believes the could rise another nearly 10 percent from Friday's 2,372 close to 2,600 this year.

At that point, he said he expects a pause, but not an end to the bull market that turned 8 years old last week, making it the second-longest run ever.

While stocks approach his 2,600 target, Paulsen said the 10-year bond yield could top out at 3.25 to 3.5 percent from about 2.57 percent in early Monday trading.