Growth stocks were hammered last year due to macroeconomic and geopolitical headwinds. However, they are expected to stage a recovery this year as interest rate hikes slow in response to cooling inflation, and the economy might achieve a soft landing.
Last week, the Fed raised interest rates by 25 basis points (bps), a slowdown from the 50-bps hike in December and a string of four 75-bps hikes from June through November 2022. While Fed Chair Jerome Powell hinted at a couple more rate increases, he added, “We can now say, I think for the first time, that the disinflationary process has started.” This indicates that the Fed is nearing the end of its hiking cycle.
