Technology stocks leadership

Technology stocks are silently regaining their leadership in the stock market. They are being perceived as defensive as they are somewhat shielded from the current worries in the real economy and the banking sector. Nasdaq is up 14% year-to-date versus the broader index S&P 500 is up 4.9%. Valuations do not appear to play a role here. Relative valuation of the tech sector against the market in terms of PER is indeed back to pre-Covid levels. This is surprising as interest rates have been rising and long duration growth stocks generating most of their cash flows in the far future should be more sensitive to this. To us as value investors, valuations are to the stock market what gravity is to physics and we continue to shy away from lofty valuations in the current environment.