Growth stocks and related exchange traded funds rebounded Tuesday, paring some of their previous session’s losses after contagion fears over China’s property market triggered a global sell-off.
Concerns over Chinese property developer Evergrande acted as a catalyst for traders to sell off from record highs on Monday, but the broad equity markets recovered some of the losses on Tuesday.
“People have been preconditioned to buy pullbacks for most of the last year plus,” Michael James, managing director of equity trading at Wedbush Securities, told Reuters.
“But that overhead nervousness is still there, and that’s why we’re not seeing material further upside,” he added.
Investors are now waiting on the Federal Reserve’s results from its two-day policy meeting in which the central bank is expected to outline its plans to ease pandemic-era stimulus measures, but many still expect an actual announcement to be delayed until the November or December meetings. Many have attributed the stock market’s stellar recovery from the pandemic-fueled downturn to new record levels due to support from the Fed, along with fiscal stimulus.
“We are at a pivot point: We are moving away from maximum policy accommodation, and at the same time, the V-shaped recovery is over and it poses some real questions about what is next,” David Donabedian, chief investment officer at CIBC Private Wealth, told the Wall Street Journal.
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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