Tech Surge Sends Valuations to Extremes, but Traders Don’t Care
- S&P 500 info tech sector trades at 25 times forward earnings
- Wall Street bets on Fed rates u-turn to justify soaring prices
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Wall Street traders are ignoring warning signs that the rally in technology stocks looks overblown.
Optimism that the Federal Reserve will pivot from its most aggressive interest-rate hiking cycle in four decades – a major headwind for the industry last year – has pushed the S&P 500 Information Technology Index up 19% in 2023 compared with a 7.7% gain for the S&P 500 Index. That’s info tech’s strongest start to a year relative to the S&P 500 since 2009, according to data compiled by Bloomberg. Last month alone, the sector beat the broader gauge by the most in two decades.