U.S. markets rallied Friday, with growth-style exchange traded funds leading the charge, but the gains were not enough to offset a week of losses in response to a slowing economic recovery and the potential for stimulus tapering.
Global equities have come under pressure this week, with U.S. stocks slipping from record highs, as increased infection rates of the Covid-19 delta variant globally added to other economic concerns.
“We’re looking at a period of very strong, but also very uneven global growth over the next couple of months,” Hugh Gimber, a strategist at J.P. Morgan Asset Management, told the Wall Street Journal. “The government reaction now looks very different across different parts of the world.”
Growth stocks were also supported by depressed U.S. Treasury yields, which were on pace to end the week lower on concerns due to the rise in coronavirus cases.
Investors are now looking forward to the Federal Reserve’s annual research conference in Jackson Hole, Wyoming next week to gauge the direction of further Fed policy changes. Minutes from the central bank’s latest policy meeting revealed officials will be reducing the unprecedented bond purchasing measures soon.
“This is a better environment for the tech stocks. The environment for tech on macro picture is probably brightening to some degree as the economy begins to show signs of growth, but at a slower pace,” Robert Pavlik, senior portfolio manager at Dakota Wealth, told Reuters. “This market is still trying to feel its way around. There’s no directional leadership coming out of any particular group, aside from maybe the healthcare space.”
Investors interested in the growth style can turn to targeted strategies like the American Century Focused Dynamic Growth ETF (FDG), which is designed to invest in early-stage, high-growth companies. FDG is a high-conviction strategy designed to invest 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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