U.S. equities will be hit hard if the Federal Reserve raises interest rates more than once, Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch, said Monday.
"I don't think the market is ready for two or three rate hikes this year. If you look at the most expensive sectors in the S&P, they're basically sectors that have done really well because rates have gone nowhere for seven years," she told CNBC's "Fast Money: Halftime Report."
"Our house view is that we're going to see one rate hike this year; I think the market might be positioned for that, but anything more than that would actually roil the markets, especially in June," she said.
Market expectations for a June rate hike have shot up recently amid hawkish rhetoric from several key central bank officials, including San Francisco Fed President John Williams.
On Monday, he said that two to three rate hikes this year were reasonable and that inflation was on track to meet the Fed's goal of 2 percent in the next year or two.
The three major U.S. stock indexes have fallen at least 1.8 percent over the past month.
Subramanian said her firm's year-end target for the is 2,000, about 2.5 percent lower from where the index traded Monday.
S&P 500 in 2016
"What worries me is that we're entering into a seasonal soft patch as it is. You generally see the rule 'sell everything in May, buy back in September.' On top of that, we've got potential for the Fed hike, which I don't think the market is adequately discounting; we've got potential for 'Brexit,' granted the odds are a lot less extreme than they were a month ago and we've got softness in oil prices," among other factors, she said.
— Reuters contributed to this report.