Tech stocks haven't been this hot since the dot-com bubble
Investors haven't loved tech stocks this much since the height of the dot-com bubble.
The sector is on pace to absorb the most capital in 15 years, an inflow that will represent roughly 25% of assets under management for the group, according to Bank of America Merrill Lynch data. For context, the same measure hasn't exceeded 17% on an annual basis since the dot-com era.
Bank of America Merrill Lynch
While that may sound like an encouraging sign for stock investors seeking fuel to keep the eight-year-old bull market chugging along, BAML has a warning: If the rest of the market doesn't catch up, there could be problems.
"The longer it takes the economy and yields to pick up, the greater the risk of tech mania," BAML chief investment strategist Michael Hartnett wrote in a client note.
Hartnett notes that the Nasdaq Internet Index, a 90-company gauge featuring the likes of Google, Amazon and Facebook, is on pace for a 75% gain in 2017.
Tech stocks are being underpinned by the best profit expansion in the S&P 500, excluding energy. The sector is projected to see earnings expansion of 19% for the full year 2017, while the broader benchmark is expected to see ex-energy growth of just 9.2%, according to data compiled by Bloomberg. Tech has been one of the leaders of the S&P 500's profit growth resurgence, which has the index primed for its best quarter since 2011.
The S&P 500 is currently trading at about 21 times earnings, far lower than the P/E of 31 times seen at the peak of the dot-com era.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- One of the world's only 5-star airlines seems to be considering asking business-class passengers to bring their own cutlery
- Vodafone Idea FPO allotment – How to check allotment, GMP and more
- From terrace to table: 8 Edible plants you can grow in your home
- India fourth largest military spender globally in 2023: SIPRI report
- New study forecasts high chance of record-breaking heat and humidity in India in the coming months
- Gold plunges ₹1,450 to ₹72,200, silver prices dive by ₹2,300
- Strong domestic demand supporting India's growth: Morgan Stanley