US equity valuations do look stretched when compared to their history and other developed market equity indices – especially with corporate profits standing at a 17-year high. But those valuations aren’t necessarily high enough to trigger a bear market. Rising inflation and bond yields are more of a concern.
Valuations: US sectors compared
At the sector level, it’s true tech looks expensive, but it does have the catalysts needed to keep its engine running. In contrast, consumer discretionary stocks do look overvalued given company specific risks, as do industrials. On the other end energy, healthcare, and banks are more reasonably valued.Download the full outlook for US equities