Growth ETFs Rally as Earnings Season Picks Up Pace | ETF Trends

Growth stock-related exchange traded funds spearheaded the broad market move higher on Monday as both the Dow Jones Industrial Average and the S&P 500 touched record highs with the earnings season kicking into high gear.

Among the standouts, Tesla (NasdaqGS: TSLA) surged after car rental firm Hertz placed an order for 100,000 Tesla cars and Morgan Stanley upgraded its price target on Tesla shares, Reuters reports.

“(Tesla) is moving weirdly with energy but also renewables… people finally figured out that if natural gas is at the equivalent of $180 a barrel that is probably good for renewables,” Jay Hatfield, founder and CEO of Infrastructure Capital Management, told Reuters.

“Also, it looks like we are going to get the Build Back Better law and infrastructure with a lot of tax credits for renewables, so that is positive,” Hatfield added.

President Joe Biden still held hopes for an agreement on his fiscal spending plans before a climate summit in Scotland. The White House also stated that Democratic negotiators were nearing a deal.

Of the 119 companies in the S&P 500 that have reported earnings as of Monday morning, 83.2% have beat expectations. Investors have also been closely watching earnings for how corporate America is responding to ongoing issues like supply chain bottlenecks, labor shortages, and rising costs.

“Earnings have been good so far, there is always positive vibes in earnings because you have warnings before it starts of course. But for some supply-chain problems, generally the economy was strong so people were positioning ahead of earnings,” Hatfield added.

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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