Tech stocks overvalued after rally sparked by banking crisis: Barclays

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Tech stocks are now among the most overvalued after investors flocked to the sector for safety during the bank crisis, Barclays says

during 2023. The group bounced off its most recent low just after Silicon Valley Bank and Signature Bank collapsed and were taken over by regulators earlier this month, accelerating a drain in deposits by customers at small and mid-tier banks.

A slide in Treasury yields from this year's peaks has helped fuel the 17% jump in the S&P 500 Information Tech group. The slump in yields can translate into lower borrowing costs as high costs cut into the value of future earnings for tech and other growth companies. The S&P 500 turned negative but has since risen by 4%.

"Rather than chasing yet another crowded trade that is vulnerable to the next unwind, we recommend seeking safe haven among quality stocks at less demanding valuations," he said.

 

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