What’s bad news for the jobs report is actually “good news for growth stocks,” said Joel Shulman, founder and CEO of ERShares, in a recent discussion of the latest jobs report on Fox’s Mornings with Maria.

“Growth stocks have surged, in some cases up to 26% on average for entrepreneurial growth stocks,” he added, noting that the low private payroll numbers in the jobs report is a positive for the market.

Looking forward to the rest of the year, Shulman expects “more choppiness… in Q3. We’re seeing a day on for growth, a day off for value.” 

Ultimately, though, the year will end stronger. 

Inflation the Main Concern for the Second Half of 2021

Looking forward, the primary concern is inflation, which is notoriously bad for growth stocks. The demand-pull for wages is also unnerving investors.

Of particular concern to Shulman is the cost-push of food prices and the effects that will be felt from the drought in the western part of the country.

“We think this is a stock picker’s market,” Shulman said, going on to explain that genomic stocks such as Intellia Therapeutics (CRSP) go up with scientific breakthroughs. Intellia’s recent breakthrough in using CRISPR technology to successfully give treatment via IV saw the stock climb 110%. 

Another point to remember, Shulman said, is that “cyclicals are having a strong period compared to last year, they’re catching up; usually what they do is they spend heavy on technology.” 

While this is not happening yet, per se, Shulman said that when it materializes, the effect will be to push other stocks up as well. 

Opportunities in an Active IPO Market

The IPO market has been extremely active, up 141% from last year with over 2,000 new IPOs in the first half of this year. SPAC markets, M&A, and IPOs are the places to look to find appreciation in the markets, Shulman said. 

When looking at the market overall, there are certain pockets to watch out for, however. 

Ultra-high growth stocks, particularly in the tech sector, were hit very hard in February. These are often the first to succumb to inflation. Wages picking up and rising food prices could all have a “devastating effect on growth stocks,” Shulman explained. 

But value stocks have also been “pushed to the extreme,” leading to the forecasted choppiness in the third quarter. 

A generalized pattern of back-and-forth between growth and value daily is one that Shulman anticipates continuing into Q3. 

“We don’t see people making a lot of money overall in the indexes for Q3. We see it’s going to be selective stocks (and) we’re going to see some surprises, both upside and downside,” Shulman said. 

Going into Q4, Shulman is looking for valuations to begin to catch up with growth. Yet this will again depend heavily on inflation.

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