Technology companies have been the backbone of the U.S. stock market this year, rallying almost twice as much as the next best sector.
Now there are signs investors might be thinking twice about the trade, with $211 million exiting the biggest exchange-traded fund tracking the group in the week through Tuesday. That’s the biggest weekly withdrawal in two months and follows three weeks of inflows, according to data compiled by Bloomberg.
Investor reticence may be at least partly the result of climbing valuations. The S&P 500 technology sector trades for 24.4 times trailing annual earnings, about 3 points higher than the benchmark index in the past week. It’s the biggest spread since June 2008.
After leading the stock market’s rally this year, tech stocks have trailed their peers in the past week as the S&P 500 tumbled and recovered losses amid political turbulence in Washington. The group is down 0.7 percent since May 16, the third-worst performing sector in the benchmark gauge.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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