Growth stocks and related exchange traded funds stood out in mixed trading across U.S. markets after the release of minutes from the September Federal Reserve policy meeting.
The latest Fed minutes revealed that U.S. central bankers were thinking that they could start cutting back on pandemic-era support for the economy by mid-November, but they remained divided over the magnitude of the threat posed by elevated inflation and how soon they will require interest rate hikes, Reuters reports.
“I think the Fed might be forced to raise rates quicker than they want to,” Carter Henderson, portfolio manager at Fort Pitt Capital Group, told the Wall Street Journal. “Inflation, in my eyes, is not transitory.”
The Labor Department earlier revealed that consumer prices rose in September, adding to speculation of a Fed interest-rate hike.
“Equity markets need to incorporate the higher uncertainty on central banks’ approaches and the uncertainties on the earnings side,” Antonio Cavarero, head of investments at Generali Insurance Asset Management, told the WSJ. “This doesn’t mean the tide has turned, but some higher caution is probably the way to go for the next few weeks.”
Analysts anticipate corporate America to report strong profit growth for the third quarter despite concerns over the supply chain and higher prices that are affecting businesses amidst the ongoing pandemic.
“The market is in a show-me phase” with earnings, Jim Awad, senior managing director at Clearstead Advisors LLC, told Reuters, hoping “that stronger-looking guidance” will help to support prices.
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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