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Bill Gross: Fed's projected interest rate hikes took a bite out of the financials rally

The Federal Reserve's indication of several rate hikes over the next few years took a bite out of the financials rally in the short term, billionaire bond investor Bill Gross told CNBC on Wednesday.

The Fed on Wednesday approved the first interest rate hike in a year. In addition, the FOMC indicated a higher rate in its look ahead than projected back in September. The committee now expects three rate hikes in 2017, two or three in 2018 and three in 2019.

Gross said on CNBC's "Power Lunch" the expectation of a higher interest rate halted the financials and banks rallies.

"Yes, banks like higher interest rates, but they like a spread between the long-term rate and the short-term rate, and to the extent that we see now the yield curve flattening from the up side with short-term rates going up ... it narrows their margins," he said. "Financial rallies have been halted, at least to my way of thinking in the short term."

— CNBC's Jeff Cox contributed to this report.