The S&P 500 is currently up 1.4% year-to-date, but as shown below, only three sectors are outperforming the index — Technology, Communication Services, and Industrials.  Given Tech’s massive weighting of more than 23% in the S&P, its 3.2% YTD gain has a big impact on the overall market’s gain.  Tech’s huge weighting is also the reason why eight of eleven sectors are underperforming the S&P.

We continue to see elevated P/E ratios.  The S&P’s trailing 12-month P/E is currently 21.9, while Real Estate is at 49.9, Technology is up to 27.5, and Consumer Discretionary is at 25.3.  The only sector with a P/E ratio below 19 is Financials at 14.5.

Absolute levels of valuations like the chart above don’t tell you much.  The chart below shows where valuations stand for sectors relative to levels seen over the last ten years.  As shown, the S&P 500’s current P/E ratio is higher than 97.9% of all other P/E readings seen for the index over the last ten years.  That’s high!  And three sectors have valuations in the 98th percentile or higher, with Technology at the top at 100%.  Over the last ten years, Tech’s P/E ratio has never been higher.

The only sector where valuations are currently “average” compared to the last ten years is Financials.  Sign up for Bespoke Premium and get half off your first three months.  Click here for this special offer.