Good evening, Bull Sheeters. Finance reporter Anne Sraders here again, standing in for Bernhard this week.

U.S. stocks managed to regain some ground today as Federal Reserve chair Jerome Powell once again reassured markets about the Fed’s easy-money policies, telling Congress that inflation will likely remain high “in coming months before moderating.” Elsewhere, Asian and European stocks didn’t have the best day, but Bitcoin is recovering slightly.

Let’s check in on the market action today.

Markets update

Asia

• Asia stocks were in the red, with the Hang Seng down over 0.6%, the Nikkei down 0.4%, and the Shanghai Composite over 1% lower.
• Thailand is mulling restricting exports of its locally made AstraZeneca vaccines to fight cases in its own territory.
• Japan‘s watchdog regulator and central bank are both planning to investigate the alleged inadequacy of local financial institutions’ anti-money laundering measures, per Nikkei.

Europe

• The European bourses were off, with the Stoxx Europe 600 in the red, with France’s CAC 40 and Germany’s DAX flat, while London’s FTSE was down nearly 0.5%.
• Just didn’t: Nike lost out on a court challenge against an EU decision to investigate its tax affairs in the Netherlands.
• Inflation in the U.K. rose to the highest levels since 2018, reaching 2.5%, above the Bank of England‘s target.

U.S.

• U.S. stocks were mixed, with the S&P 500 ekeing out gains, closing up over 0.1%, the Dow over 0.1% higher, and the tech-heavy Nasdaq about 0.2% lower.
• Senate Democrats unveiled a budget agreement, which includes a Medicare expansion, with a top-line price tag of $3.5 trillion.
• Following a hot inflation reading, Federal Reserve chair Jerome Powell told Congress on Wednesday that inflation will likely stay “elevated” in coming months but will then moderate. The Fed also made comments about cryptocurrency, weighing a central bank digital currency, Powell said.

Elsewhere

• Gold is up, trading over $1,820.
• The dollar is down.
• Crude is down, with Brent trading below $75/barrel.
• Crypto is on the mend: Bitcoin is up slightly, trading around $32,900 as of Wednesday evening, while Ethereum is also higher. (Sorry, Dogecoin HODLers: That coin is still in the red.)

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Taking a look at the tech trade

Thinking back to late 2020 and early 2021, recall that the so-called rotation trade was all the rage, as investors looked into more cyclical stocks that were tied to the broader economic recovery.

But lately tech has been on a run, and despite its two-day slump on Tuesday and today, the tech-heavy Nasdaq Composite has recently hit all-time highs. The Nasdaq 100, meanwhile, which holds the biggest tech names, closed at an all-time high today, thanks in large part to Apple, which saw its market cap kiss $2.5 trillion on Wednesday after closing up 2.4% following a report that it’s boosting iPhone production.

But even in light of the recent records, some bulls like Wedbush analyst Dan Ives are continuing to bang the drum on the tech trade, arguing that the second-quarter earnings season could juice share prices even more.

“June results and guidance around the corner over the coming weeks will be another positive catalyst for tech stocks and result in further multiple expansion as we see tech stocks up another 10%+ in [the second half of the year] reflecting this good news,” Ives predicted in a Wednesday note.

And he’s not stopping there: While Ives acknowledges that there’s been a “pull forward” of demand in areas like cloud, ecommerce, and cybersecurity during the pandemic, “massive growth (and further multiple expansion) is still on the horizon with tech stocks and FAANG names underestimating this surge of demand for the next 2-3 years.”

“With the digital transformation kicking into its next gear of growth,” he added, “we believe the Street is starting to look again at a ‘risk on’ tech trade heading into the rest of the year.”

But let’s not forget how far tech has come in past year, and how expensive shares have gotten. We’ve been seeing Dotcom Bubble comparisons for a while now (in fact, I wrote about them myself back in 2020), but Morgan Stanley highlighted a “chart of the week” in a Monday note that got my attention:

Now, we’re all well aware of the Street’s hand-wringing over sky-high valuations for tech stocks. Morgan Stanley CIO Lisa Shalett notes that “historically low interest rates against a solid economic growth backdrop continue to support rich valuations, driving the price/sales (P/S) ratio of the tech sector to levels last seen at the peak of the dot-com bubble in 2000.” But, “unlike then,” she wrote in a Monday note, “the sector’s concentration in the broad market index didn’t drive severe distortions in the index’s valuation. Today, tech and the largest stocks in particular are well over 35% of the index, meaning the S&P 500’s P/S is now 50% higher than in 2000 (see chart).” (Emphasis is mine.)

“This poses questions given our view that higher input costs, rising corporate tax rates and more stringent regulation create headwinds for tech stocks,” she added. Those factors could all pose risks for Big Tech stocks moving forward.

As always, we’ll have to wait and see. But as we’ve seen, it seldom pays to bet against tech.

Banks earnings update: Three of the Big Four—Bank of America, Citigroup, and Wells Fargo—reported Q2 earnings today, and the results were a bit mixed. BofA posted $21.6 billion in revenues, below year-ago revenues and estimates thanks in part to low interest rates that impacted net interest income; Citigroup managed to top estimates with its $17.5 billion in revenues, but they were still lower than a year ago; Wells Fargo, meanwhile, fared better, beating estimates for profits and revenues, the latter up from the year-ago quarter at $20.7 billion. (Unsurprisingly, Wells Fargo was the only stock of the three that closed in the green, up roughly 4%.)

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Anne Sraders
@AnneSraders
Anne.Sraders@Fortune.com

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

Today's reads

Oatly in hot water? Trendy oat milk brand Oatly found itself the subject of a short-seller report on Wednesday, as Spruce Point Capital Management accused the company of using less-than-above-board accounting practices and misleading investors about how eco-friendly its production is. Oatly's stock sunk on the news, closing 2.8% down.  

S&P[ricey]. The S&P 500 has been hitting all-time highs lately, but it's also hitting new levels of pricey. Fortune's in-house valuation skeptic Shawn Tully writes that the Shiller P/E, the "highly respected" metric developed by Robert Shiller, "hit a mark showing that the S&P 500 is now pricier than in 96% of all quarters over the past 141 years. Put differently, big-cap stocks have only been this expensive 4% of the time in the recorded history of equity markets." Dig in here. 

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Market candy

-15%

That's how much shares of Reddit-trader-favorite AMC fell on Wednesday as meme stocks broadly slumped.