Trading Nation

This sector is in desperate need of a rate hike

Can financials turn around?

Out of all those in the market speculating on the Federal Reserve's next move, investors in at least one struggling sector may be hoping for a rate hike.

Financial stocks have gone from leading the early this summer to become the worst-performing sector in the last month. Within the sector, bank stocks have been the hit the hardest, falling 9.6 percent in one month.

"The financials were some of the best-performing sectors because we all expected that Fed rate hike in September," Erin Gibbs of S&P Capital IQ said Wednesday on CNBC's "Power Lunch."

The Federal Reserve is scheduled to hold its Federal Open Market Committee meeting next week, and some expect the Fed to increase its target on the federal funds rate.

Read More Investors push Fed: Go now, go big

"It's only in August, when we started seeing the devaluation of China that we started seeing questions about whether it's going to be raised in September, and then of course, questions about the banks," Gibbs said.

In one month, Citigroup, Bank of America and Wells Fargo have tumbled more than 12 percent, 10 percent and 9 percent, respectively.

However, Gibbs said she sees long-term value in the financials sector, which will see a boost whenever the Fed does decide to raise rates. She said bank stocks will also be aided by a strong economy and lower legal costs.

But Todd Gordon of said the divergence between the 30-year bond yield and the S&P financials sector ETF (XLF) signals more trouble ahead, especially if the market continues to slide.

"They're not immune to general market weakness here," Gordon said on "Power Lunch."

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