Fed rate hike won't stop bull market run: Expert

Rate hike won't kill bull market: Pro

The prospect of rising interest rates is spooking investors, but even a Federal Reserve hike will not stop bull market momentum, one expert said Monday.

The three major U.S. averages closed about 1 percent lower Monday after posting six straight weeks of gains. Strong October jobs gains announced Friday stoked expectations that the U.S. central bank could lift its short-term interest rate target next month.

"With the Fed getting poised to raise rates, it makes sense for markets to get a little more volatile," said David Donabedian, chief investment officer at Atlantic Trust, in a CNBC "Power Lunch" interview.

Traders work on the floor of the New York Stock Exchange.
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He expects "three or four small rate hikes" by the end of next year, bringing the federal funds rate from near zero to between 1 and 1.25 percent. As the rate would still fall below historical trends, it is "not the stuff that's going to kill an equity bull market."

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Monday's selling is not alarming, as the market "looked overbought by any measure" after the weeks-long winning streak, added Mark Luschini, chief investment strategist at Janney Montgomery Scott.

"We're not put off, necessarily, by this pullback. In fact, we wouldn't be surprised if it ran a little bit deeper before it was all said and done," he said Monday on "Power Lunch."