U.S. growth stocks and related exchange traded funds held flat Tuesday, following broad market selling, after investors digested the latest inflation report and mixed start to the corporate earnings season.
New inflation data revealed consumer prices rose at their fastest rate in over a decade, the Wall Street Journal reports.
The Labor Department revealed that June’s consumer price index jumped 5.4% year-over-year, the fastest 12-month rate since August 2008, adding to fears that the current spike in inflation is not just temporary.
“The bottom line is that today’s report showed continued breadth, strength and persistency of inflationary pressures,” Jefferies analysts said in a note. “Given the acute inventory shortages and no sign of weakening demand, it is hard to imagine that these pressures will abate in the near-term.”
Nevertheless, some market observers argued that the main culprits behind the spike in consumer prices, like used cars and airline fares, will not be persist throughout the rest of the year.
“Once you realize that a third of the increase is used car prices, the transitory picture becomes more clear,” Jamie Cox, managing partner for Harris Financial Group, told the WSJ. “Inflation is rising, but things are well behaved and have not changed materially.”
Investors who believe the inflation spike is temporary and are 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, along with 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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