May 28, 2021
U.S. markets rose Friday toward their fourth consecutive month of gains, with growth exchange traded funds back in style, as investors brushed off inflation concerns.
Consumer prices as measured by the personal consumption expenditures (PCE) price index, excluding more volatile food and energy prices, were up a slightly higher than expected 0.7% over April after a 0.4% dip in March, Reuters reports.
Over the 12 months ended April, the core PCE price index advanced 3.1%, overshooting the Federal Reserve’s 2% target and revealing pent-up consumer demand as the economy tries to recover from the coronavirus pandemic.
“The market is less concerned about the inflation numbers and more interested in the fact that the reopening of the economy would lead to better corporate performance,” Rick Meckler, partner at Cherry Lane Investments, told Reuters.
Growth stocks and related ETFs are gaining momentum after Federal Reserve officials helped assuage fears over surging inflation and spiking bond yields.
As Inflation Fears Fade, Consider Growth ETF Exposure May 24, 2021
U.S. markets jumped Monday, with the technology and growth segments taking charge. Investors can capture the growth style through targeted exchange traded fund strategies.
While inflation concerns remain in the background, investors are dipping back into areas that have been the most sold-off this year. Some may even believe that the inflationary pressures could be short-term.
“Inflation concerns have lessened, there’s more of a wider recognition that inflation will be transitory,” Fahad Kamal, chief investment officer at Kleinwort Hambros, told the Wall Street Journal. “This is reflecting the fact that we hit the fastest part of the recovery. Growth, while continuing, is going to be at a decelerating pace.”