U.S. markets slipped Wednesday, but growth stocks and related exchange traded funds maintained their strength after updated economic data revealed the private sector added fewer jobs than expected over July, weighing on more economically sensitive sectors.
ADP data revealed that 330,000 private sector jobs were added last month, or almost half the number economists were expecting, the Wall Street Journal reports. The ADP attributed the shortfall to bottlenecks in hiring that continue to hold back the labor market.
“Today, I think part of the reason why markets are taking a bit of a breather is because we’re having a few more headlines about Delta that is making people question: Is people’s behavior going to change now because of this new information?” Kara Murphy, chief investment officer of Kestra Holdings, told the WSJ.
Stocks have pushed toward record highs amid the strong Q2 earnings reports and signs that the economic rebound is keeping course but at a slower pace. The partially tempered outlook can be attributed to the spread of the Covid-19 delta variant of and a slowdown in vaccinations, which have added to fears that the government could reinstate restrictions on the economy and travel.
“I think the market is going to continue to move higher, but a caveat is that the pace has been unbelievable,” Larry Adam, chief investment officer at Raymond James, told the WSJ. “We’re not likely to see those kinds of returns going forward. I think we’re entering an environment where the pace of returns is going to slow.”
Investors interested in the growth style can turn to targeted 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 and high profitability, growth, and scalability.
Additionally, investors can look to the American Century STOXX U.S. Quality Growth ETF (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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