NEW YORK (TheStreet) -- The financials sector is poised for growth as the Federal Reserve'srate hike looms closer, according to Nick Colas, chief market strategist at Convergex.

"The financials are one of our favorite sectors for the summer," said Colas. "Financials benefit from a steepening yield curve, and it's very clear that the longer end of the curve is going to move higher as the bond market gets ready for an eventual Fed liftoff." 

Yields on the benchmark 10-Year Treasury stand at 2.31%, compared to the 2.12% yields seen near the start of the year. Higher interest rates would boost margins for banks.

Financial stocks in the S&P 500 -- a category that includes such major names as Bank of America (BAC) - Get Report, JPMorgan Chase (JPM) - Get Report and Citigroup (C) - Get Report -- have returned about 1.8% since the beginning of the month. Those three banks, however, traded lower on Wednesday, following the Federal Reserve's decision to keep rates unchanged, according to the statement from its June meeting.

"Waiting too long to begin normalization can risk overshooting our inflation objective," Fed Chair Janet Yellen said in a press conference following the release of the Fed's statement. "Beginning too early could risk derailing our recovery." 

Higher rates also increase borrowing costs for consumers, which may price them out of the housing market. For that reason, Colas isn't a fan of the homebuilder sector. "You are going to see more expensive mortgages, and it's a time to be cautious on that group."

Rates on a 30-year fixed mortgage stand at 4.04%, according to Freddie Mac, a level not seen since November of last year.

However, the SPDR S&P Homebuilders ETF (XHB) - Get Report rose 1.3 percent over the past month. It includes stocks like M.D.C. Holdings (MDC) - Get Report and Standard Pacific (SPF) , which agreed to acquire Ryland Group (RYL) earlier this week. 

Colas also advises caution when it comes to rate sensitive sectors such as utilities and telecoms. These companies' businesses tend to be capital intensive, and higher interest rates would increase their costs.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.