“Bulls say the unprecedented discount means technology stocks, which tend to lead during expansions, are too cheap to pass up as the world economy grows,” Bloomberg reports. “Bears say the shares will remain the worst-performing group in the S&P 500 this year with companies and governments spending less on technology as growth weakens in Europe and China.”
XLK, the tech fund, is one of nine sector ETFs that carve up the S&P 500. It has one of the cheapest valuations based on forecasted fiscal year earnings per share. Consumer Staples Select Sector SPDR (NYSEArca: XLP) is the most expensive with a P/E of 17.7, according to State Street Global Advisors data.
The chart below shows the year-to-date performance of the nine sector ETFs, using the S&P 500 as the baseline.
Full disclosure: Tom Lydon’s clients own AAPL and QQQ.