Tech sector is priced to ‘perfection’: Expert

After the Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) hit record closing highs, Bob Elliott, Unlimited co-founder, CEO, and chief investment officer joins Josh Lipton and Madison Mills on Market Domination to discuss the day’s market moves amid changing macro conditions.

Elliott says, “Coming out of the Fed meeting last week, we’re clearly seeing an environment where the Fed is committing to delivering significant monetary easing, even accommodative policy, despite the fact that asset prices are near highs and the economy is doing all right. That should be positive for growth ahead relative to some of the concerns about a downturn that are being priced into the bond market. And as a result, should probably favor stocks relative to bonds in the near future.”

He tells Yahoo Finance that the tech sector is priced to perfection, saying, “When you look at what’s priced into the tech side of the equity market, you have not only perfection but some of the most incredible earnings outcomes.”

Elliott explains, “Part of the story here on a forward-looking basis is that easing is going to help create a bit more breadth in the overall stock market. So those areas of the market that have been underperformers relative to mega-cap growth companies are likely to see some benefit from an easing of financial conditions. And at the same time, those lofty expectations in the mega-cap tech stocks, you know, are continually very challenging to meet on an ongoing basis. And so I think some cooling there relative to the rest of the market makes a lot of sense ahead.”

He says all indications coming from the Federal Reserve suggest “the Fed is happy to cut interest rates even if the economy is strong…if [inflation] no longer a concern, why maintain interest rates at this level when you can cut interest rates and avoid even the smallest risk of an economic downturn?”

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Naomi Buchanan.