Even several more Fed rate hikes won't kill the stock market run, strategist Jim Paulsen says

  • The Federal Reserve is "going to have to tighten for some time before we even notice," strategist Jim Paulsen says.
  • Investors also shouldn't get scared away from risk assets, he tells CNBC.

Several more rate hikes by the Federal Reserve likely won't kill the stock market's run-up, closely followed strategist Jim Paulsen said Wednesday.

The Fed is "going to have to tighten for some time before we even notice," the Leuthold Group chief investment strategist said on "Squawk Box." He added that the European Central Bank will likely trail behind the U.S. central bank with tightening, and investors shouldn't get scared away from risk assets.

The Fed has raised interest rates only four times in the last nine year. The most recent hike was last month, which followed increases last March, in December 2016 and in December 2015.

The central bank reiterated its federal funds rate forecast in June, saying it still expects its benchmark rate to reach 1.4 percent by the end of 2017.

Fed Chair Janet Yellen is outlining her monetary policy Wednesday in her semiannual address to Congress.

Dow futures jumped 100 points after Yellen indicated in prepared remarks that gradual rate increases are coming.

Paulsen said the stock market is in good shape. "Not only just the markets, but I think the underlying economy is continuing to do fairly well."

Also on the show, Bespoke Investment Group Co-Founder Paul Hickey said despite concerns that the economy is slowing, U.S. data have come in well.

He said investors should focus on the financials, tech and energy sectors short term.

Sign Up for Our Newsletter Morning Squawk

CNBC's before the bell news roundup
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.

—CNBC's Fred Imbert contributed to this report.