Growth Stock ETFs Gain on Upbeat Economic Data, Omicron Study

Growth stock-related exchange traded funds rallied on Wednesday as upbeat economic data helped assuage concerns over rising COVID-19 infections and the potential dent on the ongoing expansion.

Updated data revealed that confidence among U.S. consumers rose in December to a level above what economists had expected, suggesting that the economy would continue to expand in 2022 despite the resurgence in coronavirus infections and reduced fiscal stimulus, the Wall Street Journal reports. Additionally, consumer concerns over inflation abated, according to the Conference Board.

Furthermore, U.S. home sales were up in November as low mortgage interest rates and a strong job market supported demand. Existing homes sales were also on pace for their best year since 2006.

“We’re starting to get a little more clarity as we head into year-end here that the economy does remain strong broadly speaking,” JP Coviello, senior investment strategist at Bessemer Trust, told the WSJ.

Investors were also taking on more risk after hearing that the Omicron variant was often less fierce than expected. A South African study indicated that those infected with Omicron were less likely to be hospitalized than those suffering from the Delta variant, easing some concerns over the severity of the new variant, Reuters reports.

“Markets did a very effective job over the course of the last two weeks of pricing in all three major headwinds – the discovery of the Omicron variant, the hawkish pivot from the Fed and then Build Back Better being shelved for the time being,” Art Hogan, chief market strategist at National Securities, told Reuters.

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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