Growth stock exchange traded funds surged on Tuesday with quality technology names fueling the rally as the Omicron variant seemed less damaging and disruptive to the economy than previously feared.
U.S. markets rebounded off the volatility from last week on bets that the latest COVID-19 variant will have a less-damaging effect on travel and consumer confidence, the Wall Street Journal reports.
Scientists and drug makers are still scrutinizing the severity of Omicron and how existing vaccines fare against it. Meanwhile, the latest Omicron updates appear to indicate that there won’t be another severe global reaction to the spread of cases, which has fueled short covering and a return to risk.
“It’s a relief rally,” ThinkMarkets analyst Fawad Razaqzada told the WSJ.
However, Razaqzada warned that investors will be pivoting to the Federal Reserve and how the central bank will react with its monetary policy, adding, “That’s going to be the next big thing for the market.”
Some are also highlighting the lower trading volumes during the holiday season, which could add to wider market oscillations and bigger volatile moves.
“We’re in this period where investors are grappling for any news they can find and that, coupled with low liquidity, is leading to some big moves,” Hugh Gimber, a strategist at JPMorgan Asset Management, told the WSJ.
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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