While the S&P 500 is up about 1% year-to-date, earnings strength has caused its trailing 12-month P/E ratio to actually contract 1.78 points from 22.37 at the start of the year down to 20.59 as of this writing.

Below we show how trailing 12-month valuations have changed both year-to-date and over the last 12 months.

Year-to-date, every sector with the exception of Consumer Discretionary and Utilities has seen a contraction in its P/E ratio. The Energy sector has seen the biggest contraction, but it also started the year with the second highest valuation. Along with Energy, there are five other sectors that have seen a contraction of 2.5 points or more in their P/E ratios — Materials, Industrials, Consumer Staples, Telecom, and Financials.

The Technology sector is up 10% year-to-date, and even it has seen a contraction in its P/E ratio due to earnings strength. As shown in the table, Tech’s P/E started the year at 23.63, and it’s now down to 22.55.

The one sector that has seen an expansion in its trailing 12-month P/E ratio is Consumer Discretionary, which has jumped 1.62 points YTD from 23.49 up to 25.12.

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