The major stock market indexes have been experiencing wild price swings since the beginning of the year due to the U.S.-Russia-Ukraine tensions and the Fed’s decision to raise interest rates multiple times this year to combat the rising inflation.
However, given a steady economic recovery, growth stocks are anticipated to outperform the broader market. Growth stocks generally trade at a higher price-to-earnings (P/E) ratio, but the recent market correction has caused many of these stocks to trade at relatively lower P/E multiples. The expected improvement in corporate earnings should also support the performance of growth stocks. According to a FactSet report, the S&P 500 members are expected to report average earnings growth of 9% year-over-year in 2022. Investors' interest in growth stocks is evident in the SPDR Portfolio S&P 500 Growth ETF's (SPYG) 10.2% returns over the past year.
