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These sectors could rally if the Fed stays put

Utilities stand out
Utilities stand out

Stocks kicked off the week in the negative, but one safe haven sector is shining. Utilities shares rose slightly Monday, which could be a signal of what to expect from the Federal Reserve meeting this week, according to one trader.

Larry McDonald of Societe Generale said stocks in the category, along with several other defensive asset classes, tend to outperform whenever the central bank has put off a rate hike. The S&P 500 utilities sector, which does well in a low interest rate environment, could see further bounce if the Fed decides against raising rates in September, he said.

Other beaten groups this year that could see a rally if the Fed stays put are gold miner stocks and emerging markets, McDonald said.

"If the Fed comes out with a dovish posture and pushes things out again to potentially next year, utilities and these sectors will shine for a couple of months," he said Monday on CNBC's "Trading Nation."

Read More Traders are preparing for massive Fed-driven volatility

The utilities category has fallen more than 12 percent year to date. Emerging markets and gold miners have done even worse, with the tracking ETFs EEM and GDX down 15 percent and 29 percent year to date, respectively.

However, Zachary Karabell, head of global strategy at Envestnet, said the brief bounce Monday could have more to do with increased volume than with expectations for the Fed's next move.

"These are not names you go into necessarily for the trade, you go into them because you want the safety of the dividends with the awareness that you have some interest rate risk, which you've had all year in this sector," Karabell said Monday on "Trading Nation."

Read More Rising interest rates: What you need to know

Instead, he said investors might be hedging risk ahead of the Fed meeting and policy announcement, scheduled for Thursday.

"These [stocks] are not actively traded, so there could be a lot of trading today that is more of a hedging strategy ... than it is telling you something about what the Fed is doing." Karabell said.

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