Since the beginning of the year, the benchmark indexes have witnessed wild price swings. The severe volatility has been driven by the rise in the consumer price index, Russia’s invasion of Ukraine, and the Fed’s planned multiple interest rate hikes this year. Last week, the Fed approved its first interest rate hike in more than three years and planned to increase several more times this year. However, after correcting from their highs, the major indexes have recorded their best week since November 2020, driven mainly by growth stocks. Last week, the S&P 500 jumped 6.1%, while the Dow Jones Industrial Average and the tech-heavy Nasdaq Composite surged 5.5% and 8.1%, respectively.
Experts believe that the economy will continue witnessing a steady recovery this year driven by improved corporate earnings. This should bode well for growth stocks. Evercore ISI’s head of equities, derivatives and quantitative strategy, Julian Emanuel, said “I think the Fed has set the stage for investors to focus on earnings again. Bottom-line earnings estimates since the beginning of the year have risen.” Also, investors' interest in growth stocks is evident from the SPDR Portfolio S&P 500 Growth ETF's (SPYG) 17.9% returns over the past year.
