Bargains are scarce for investors in this pricey stock market

Sky-high valuations may have started as a Big Tech problem, but it's getting harder to find undervalued opportunities in an increasingly expensive stock market.Why it matters: Investors with concerns about froth are looking to rotate out of expensive corners of the market. They may not find much.What they're saying: Markets are "starting to run out of room," Lori Calvasina, the head of U.S. equity strategy at RBC Capital Markets, tells Axios. "Those nooks and crannies (investors) can go to kind of suck out the remaining valuation opportunity, it just seems like that's starting to dry up."Driving the news: The Dow Jones Industrial Average hit its first record high of 2025 driven in part by UnitedHealth.On the news that Warren Buffett's Berkshire Hathaway had taken a stake, the battered shares of UnitedHealth rallied on Friday and Monday before retreating yesterday.Its bounce back highlights the recent move into stocks that had appeared oversold. Indeed, investors have been piling into formerly forlorn sectors, like health care, consumer discretionary and materials.Such a trading strategy, known as a rotation, comes as valuations for both the biggest market cap names and the S&P 500 on a market cap basis are closing in on past highs, according to RBC.Zoom in: Yet it's not just Big Tech that has gotten expensive, Calvasina says.Even small-cap valuations are "getting elevated," though they are not at the "tip-top" of froth just yet, she notes. Equal-weighted S&P 500 valuations are getting close to peaks on a market cap basis as well.Price-to-earnings ratios on the Russell 2000 and the equal-weighted S&P don't leave "a ton of room" for the rotation trade going forward, she says.What we're watching: A market that toppy could fall over at the slightest gust of wind. That catalyst could come in the form of:Fewer rate cuts than the market is expecting.Tariffs putting broader pressure on earnings.Cracks showing up in the labor market.Inflation that stays higher for longer.Yes, but: Any one of those challenges could simply cause a garden-variety pullback of 5% to 10%, which arguably would be healthy. Still, coming into those headwinds at such high valuations leaves investors at a higher risk.Be smart: If everything is priced for perfection, the market is more vulnerable to any weakness leading to a broader pullback.

Comments

World news

ICE deports 6-year-old girl and her mom to Ecuador as New York officials blast Trump: ‘Where is your humanity?’

Independent

Trump blares ‘Whiter Shade of Pale’ and shows off umbrella flown from Mar-a-Lago in bonkers tour of White House Rose Garden

about 2 hours ago

Three children - all under the age of three - led cops to scene of parents’ murder-suicide while looking for food

Independent

Comments

Similar News

Canada Post back to bargaining after union says delays caused by unrest at Air Canada

Canada Post and union head back to bargaining table after delay

In Donbas, Ukrainians hold out as Russia besieges, bargains for their land

A devil’s bargain with Putin will only bring another war: Ukraine must make him pay

Putin’s nuclear sabre-rattling is hard bargaining – Russia has seen through Trump’s bluster

Ollie Watkins is the £60m bargain Arsenal and Man Utd won’t take

World news

ICE deports 6-year-old girl and her mom to Ecuador as New York officials blast Trump: ‘Where is your humanity?’

Pope Leo to live in Vatican ‘flatshare’ when he moves into papal apartments

Police investigate death of French online star who died during livestream after ‘10 days of torture’

Service dog reunited with blind owner two months after being stolen from Chicago backyard

Russian foreign minister warns West over excluding Moscow from Ukraine security discussions

Hurricane Erin gusts shut down East Coast beaches and swimmers from Carolinas to NYC to Cape Cod

Lost everything in a storm? Good luck. FEMA to require email address for aid as families rebuild after disasters

California resident tests positive for plague after camping near Lake Tahoe

The Latest: Texas GOP poised to approve map gerrymandered for their advantage

Moment 11-year-old girl learns she’s getting a new heart after almost a year of waiting

Israel gives final approval for controversial settlement plan

Dr. Phil sued by Christian broadcaster for ‘reprehensible conduct’ in $500 million deal: ‘Years-long fraudulent scheme’

Kid Rock hits back with lewd insult after Newsom mocks him with Trump-style post

US Navy ship USS New Orleans catches fire while docked in Japan

Jeanine Pirro will let people carry shotguns and rifles in DC - despite Trump’s crackdown - without fear of prosecution

‘We need to find him’: Family claims cops took five hours to respond when they reported their child missing

Where could Putin and Zelensky meet for Ukraine war summit?

Costco members sound off as Pepsi-to-Coke switch begins nationwide

ICE ‘used popular chain hotel’ to detain migrants despite company pledging not to participate

RFK Jr. finally reveals why he wears jeans to the gym

Building explodes after hit-and-run driver strikes gas line in dramatic video

Trump demands Lisa Cook, first black woman Fed Reserve member, ‘resign, now!!!’ and accuses her of mortgage fraud

Trump set to bar college graduates from debt relief program if employers undermine ‘American values’

Trump blares ‘Whiter Shade of Pale’ and shows off umbrella flown from Mar-a-Lago in bonkers tour of White House Rose Garden

Three children - all under the age of three - led cops to scene of parents’ murder-suicide while looking for food

The nine holiday hotspots with current cases of deadly ‘suitcase viruses’

Putin's top diplomat warns of 'road to nowhere' in Ukraine security talks

Woman ‘threatened with rape and dragged to basement by police’ in Serbia protests

GCSE students could be ‘turned away’ from sixth forms unless they get top grades

I don’t want to go on holiday – I’m too worried about my tomatoes

Congo's draft peace deal with M23 seeks to return government control to rebel-held areas

China's Xi makes a rare visit to Tibet to mark 60 years of contested rule there

Lawyer for activist Jimmy Lai defends free speech in landmark Hong Kong trial

Manitoba RCMP say same man suspected in pair of Richer-area break-ins

Gavin Newsom not ‘surprised’ by GOP lawsuit to block redistricting plan

‘America we are BACK!’ White House launches official TikTok account

HHS workers accuse RFK Jr. of stoking violence against them

Voyeurism added to lengthy list of charges for Winnipeg man: police

Horror moment 'killer' dogs attack as residents hit out over string of maulings

Meredith Kercher’s family lawyer slams Amanda Knox over new Disney murder drama

Gavin Newsom is expertly trolling Fox News stars by mimicking Trump online — right down to the nicknames

What could US and European security guarantees look like for Ukraine?

Putin and Zelensky have only met once before – here’s what happened

An Italian funeral for a Palestinian woman evacuated from Gaza becomes a call to 'make noise'

Israel to call up 60,000 reservists ahead of Gaza City move

Archaeologists discover 1,400 year old Christian cross on Abu Dhabi island

Trump who famously evaded the draft during Vietnam describes himself as a war hero: ‘‘I guess I am too’

Pete Hegseth is requiring so much security it’s taking officers off of criminal investigations

Downsize me: McDonald’s plans to cut combo meal prices after complaints

What is Vibrio vulnificus? Symptoms explained as beachgoers warned about flesh-eating bacteria

Hurricane Erin live updates: Storm to bring ‘powerful’ 20 foot waves and flooding risk along US East Coast

Jeanine Pirro says the quiet part out loud and admits to helping Trump and Republicans as a Fox News host

Elon Musk is already giving up on plans to start his own party - and instead looks to back Vance in 2028

Target appoints lifelong employee as new CEO in effort to halt sliding sales

Life after Eberechi Eze: The ‘shrewd’ operator who will rebuild Crystal Palace

Nigel Farage isn’t brave enough to tell the real asylum story

An unidentified flying object has crashed and exploded in Poland's east

Owners of high-value homes could ‘rush to sell’ to avoid capital gains raid

‘People don’t feel safe here’: The Brits living on Italy’s super-volcano

Russian anti-Putin protester found dead in London after asylum bid was rejected