Growth ETFs Gain on Bets the Fed Could Push Back Tapering

U.S. markets were mixed Friday with growth stock-related exchange traded funds pushing higher after a slowdown in jobs growth eased concerns that the Federal Reserve would tighten its monetary policy any time soon.

The Labor Department’s employment report revealed employers only added 235,000 jobs, compared to economists’ expectations of 720,000 new jobs, the Wall Street Journal reports.

“The number’s a big disappointment, and it’s clear the Delta variant had a negative impact on the labor economy this summer,” Michael Arone, chief investment strategist at State Street Global Advisors, told Reuters. “You can tell because leisure and hospitality didn’t add any jobs, and retail actually lost jobs. Investors will conclude that perhaps this will put the (Federal Reserve) further on hold regarding the timing of tapering. Markets may be okay with that.”

The equity markets are trading near all-time highs as a strong corporate earnings season helped maintain the risk-on momentum. However, there were concerns that potential tapering in the Federal Reserve’s bond purchasing program and a surge in Covid-19 Delta variant cases would weigh on the economic outlook.

Consequently, many were watching the Friday jobs report as an indicator for how the Fed would react in its monetary policy, especially after Fed Chair Jerome Powell hinted last week that full employment was a precondition to start cutting back on its bond purchases.

Investors interested in the growth style can turn to targeted strategies like the American Century Focused Dynamic Growth ETF (FDG). FDG is a high-conviction strategy that invests in early-stage, rapid-growth companies with a competitive advantage and high profitability, growth, and scalability.

Additionally, investors can look to the American Century STOXX U.S. Quality Growth ETF (NYSEArca: QGRO). QGRO’s stock selection process is broken down into high-growth stocks based on sales, earnings, cash flow, and operating income, along with stable-growth stocks based on growth, profitability, and valuation metrics.

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