U.S. markets were stuck in sideways trading Friday, with growth stocks and related exchange traded funds holding up better than their peers after new inflation data helped calm concerns over a long-term surge in consumer prices.
“We would continue to recommend a diversified equity allocation with a barbell approach that has growth exposure on one end, and economically sensitive cyclical exposure on the other end,” Art Hogan, chief market strategist at National Securities, said in a note, according to Reuters.
Investors have eased expectations that the Federal Reserve will cut back on its accommodative policy.
A recent survey also revealed U.S. consumer sentiment improved in early June while markets pared back their projections on inflation levels.
Furthermore, recent data indicated ongoing weakness in the labor market, which helped fueled expectations that the Fed will maintain its accommodative stance at the policy meeting next week.
“Macro news continues to unfold positively and we’re seeing the market move higher,” Peter Cardillo, chief market economist at Spartan Capital Securities, told Reuters.
“Investors’ enthusiasm continues and yesterday’s S&P close into new record territory suggests that a summer rally is underway … but I don’t expect any galloping increase,” Cardillo added.
As the growth style rebounds from the pummeling it received from the inflation-induced selling pressure, investors can look to strategies like the American Century Focused Dynamic Growth ETF (FDG), which is designed to invest in early-stage, high-growth companies. FDG is a high-conviction strategy designed to invest in early-stage, rapid growth companies with a competitive advantage, along with 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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