The market’s worst-performing sector could feel more pain

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Financials have tumbled to become the worst-performing sector on the S&P 500 year to date, and the pain isn't going away, according to some traders.

The financial sector is the only sector besides health care sitting in the negatives, and a 1.3 percent drop on Friday has Fort Pitt Capital portfolio manager Kim Forrest believing further declines could follow.

According to Forrest, low interest rates have given banks the time to recover, but it hasn't allowed them to make money.

"For financials in the U.S., we're really cognizant that most of the banks make money off of lending long and borrowing short, and it is not looking good," she said Friday on CNBC's "Power Lunch." "It's a tough time for banks and it looks like it's getting tougher."

For that reason, Forrest would prefer to invest in "banks that get most of their revenue from fees" rather from interest-rate-sensitive businesses.

Chantico Global founder Gina Sanchez doesn't see rates rising anytime soon.

"Foreign banks are basically looking around the world to where they can meet their liquidity requirements because Basel III essentially allows them to meet that liquidity requirement, " she said. "That's adding an additional demand for U.S. Treasurys and it's going to keep the long end lower than it might otherwise be even in a slow recovery."

As of Monday morning, the financial sector is down 3.2 percent on the year, even as the S&P as a whole is up 2.5 percent.