Growth stock-related exchange traded funds pushed higher on Thursday after the weekly jobless claims assuaged concerns over the potential economic fallout from the surge in COVID-19 cases over the winter.
The Labor Department’s latest data revealed that the number of Americans filing for first-time applications for unemployment benefits, a proxy for layoffs, dipped to 198,000 for the week leading up to Christmas, compared to 205,000 a week prior, reflecting a tighter labor market in which employers are holding onto workers despite rising concerns over the Omicron variant of the coronavirus, Reuters reports. In comparison, economists had an average forecast of 208,000 applications for the latest week.
”The biggest takeaway from this week is that markets are really kind of shrugging off concerns about the implications of Omicron and what that means going forward,” Whitney Sweeney, an investment strategist at Schroders, told the Wall Street Journal.
Despite record infection rates of COVID-19 in the U.S., investors anticipate that high vaccination rates and potentially milder symptoms from the Omicron variant could help the economy better avoid a repeat of what we experienced at the beginning of the pandemic, with many trying to avoid strict curbs.
“We’ve had a year to deal with COVID-19 and investors have started to believe that the economy can continue on if this is going to be the current level or the current type of variant we’re going to face,” Rick Meckler, partner at Cherry Lane Investments, told Reuters.
The bigger concern this week has been the low liquidity as many have taken the holiday season off, which could lead to more volatility or outsized moves in the markets. Additionally, others are adjusting portfolios in anticipation of the new year.
“On the equity side, we’re grinding higher,” Des Lawrence, a senior investment strategist at State Street Global Advisors, told the WSJ. “It looks like markets are a little bit more stable but liquidity is very thin at the moment, volumes are really light.”
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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