Growth stocks and related exchange traded funds surged Wednesday as traders looked for a cheap entry point, following a week of steep losses in the wake of the Russian invasion against Ukraine.
Mega-cap growth stocks were among the best performers in the S&P 500 and the Nasdaq benchmarks. On the other hand, energy stocks were the laggards, falling off as crude oil prices slipped below $125 per barrel.
“The pullback in oil and commodity stocks have induced this rally. It’s just profit-taking in terms of oil, gold, and the agricultural products and some bargain hunting in equities,” Peter Cardillo, chief market economist at Spartan Capital Securities, told Reuters. “Nothing has changed. We could still have one more trip downwards, test the lows that we saw yesterday, or trade around that before we can say that the market has bottomed out.”
The equity markets have also weakened in response to growing concerns over a potential slowdown in the global economy and rising inflationary pressures due to the surge in oil prices.
“People have to be very cautious here in chasing this dip, especially as these economic impacts and fears start affecting our economy as well through consumer confidence,” Jerry Braakman, president and chief investment officer of First American Trust, told the Wall Street Journal.
Stocks also picked up momentum Wednesday on a report that Ukraine was open to Russia’s neutrality talks.
“The markets crave peace, they don’t like unrest. It looks like a rumor at the moment, but any potential for peace negotiations would be great for the markets,” George Young, portfolio manager at Villere & Co., 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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