{"id":13217,"date":"2024-06-13T18:14:23","date_gmt":"2024-06-13T18:14:23","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13217"},"modified":"2024-06-13T18:14:23","modified_gmt":"2024-06-13T18:14:23","slug":"will-growth-stocks-continue-to-outperform","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/will-growth-stocks-continue-to-outperform\/","title":{"rendered":"Will Growth Stocks Continue to Outperform?"},"content":{"rendered":"\n<p><em>Jason C. from Fairfax, VA asks: <\/em>Hello Mitch, my question is about growth stocks in 2024, and whether you think 2023\u2019s outperformance streak can continue. With interest rates and inflation seeming to be stubborn, would that not potentially create headwinds for the growth category? Thank you for your time.<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for emailing, Jason. The short answer to your question is that growth stocks have already demonstrated that they can continue to outperform, even given expectations for higher-for-longer interest rates.<sup>1<\/sup><\/p>\n\n\n\n<p>If you look at the year-to-date performance of the Russell 1000 Growth Index, the S&amp;P 500, and the Russell 1000 Value Index, it\u2019s plain to see that growth stocks have been leading by a fairly significant margin.<\/p>\n\n\n\n<p>You\u2019re correct to point out that higher rates could pose headwinds for growth companies since in many cases the appeal of growth companies is the promise of higher future cash flows. The expectation of \u2018higher-for-longer\u2019 interest rates can sap the present value of those future cash flows, and lower the premium that investors are willing to pay for them.<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\">How to Master Market Swings in the Upcoming Months<\/a><\/u><\/strong><\/p>\n\n\n\n<p>Every investor knows the anxiety of seeing their investments waver with market fluctuations. While market volatility is unavoidable, there are strategies to mitigate its impact.<\/p>\n\n\n\n<p>Discover these essential strategies in our latest guide, \u201c<strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\">The Do\u2019s and Don\u2019ts of Stock Market Volatility<\/a><\/u><\/em><\/strong>.\u201d With 30 years of expertise, we provide you with actionable recommendations to navigate turbulent markets confidently. You will also uncover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Discover our top 3 best practices for managing market volatility<\/li>\n\n\n\n<li>Avoid the 3 biggest mistakes that can harm your long-term goals<\/li>\n\n\n\n<li>Access historical data that supports our expert recommendations<\/li>\n<\/ul>\n\n\n\n<p>Don&#8217;t let market swings dictate your financial future. Download our guide now and take control of your investment journey!<\/p>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\">Download Your Copy Today:\u00a0<em>The Do\u2019s and Don\u2019ts of Stock Market Volatility<\/em><sup>\u00a02<\/sup><\/a><\/span><\/strong><\/p>\n\n\n\n<p>But there are a couple of reasons I think growth stocks can remain attractive in the current environment. For one, the U.S. economy has demonstrated \u2013 at least for now \u2013 that it can absorb the impact of higher interest rates. Economic growth accelerated at the end of last year, and we\u2019ve continued to see steady GDP growth in 2024, with few signs of a recession. Estimates for the full-year of 2024 economic growth have risen from 1.3% in January to 2.4% as of the end of May.<\/p>\n\n\n\n<p>Less-rate volatility is another reason I see a constructive environment for growth stocks. Looking back at 2022, we know that 10-year U.S. Treasury bond yields surged from 1.5% at the beginning of the year to 4.5% by October of that year. Growth stocks got pummeled. I do not see much indication that yields will surge or be nearly as volatile in 2024. The 10-year is up approximately 50 basis points since the beginning of the year, which puts it back to levels seen last fall. Rate volatility has been fairly subdued.<\/p>\n\n\n\n<p>The Federal Reserve has been non-committal on rate cuts for 2024, but many investors including myself are convinced that rates will not move higher in this cycle. This assumption bodes well for growth stocks, given the expectation that rates will be lower in the future than they are today. It should also be noted that growth stocks, especially the tech giants, have some of the strongest balance sheets in the market and have exposure to many secular trends that we\u2019re seeing today, like gains in artificial intelligence. If the economy continues to grow and some of these themes mature, growth stocks can continue to perform well\u2014even if interest rates do not come down significantly in the next year or two, in my view.<\/p>\n\n\n\n<p>Instead of avoiding market changes, I believe that there are ways investors can minimize the worst impacts of a volatile market.<\/p>\n\n\n\n<p>Our free guide, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=bimonthly_dos_and_donts_zim_06_13_2024&amp;content=dos_and_donts\">The Do\u2019s and Don\u2019ts of Stock Market Volatility<sup>3<\/sup><\/a><\/u><\/em><\/strong>, provides our recommendations for investors, based on more than 30 years of expertise managing equity portfolios.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Discover our top 3 best practices for managing market volatility<\/li>\n\n\n\n<li>Avoid the 3 biggest mistakes that can harm your long-term goals<\/li>\n\n\n\n<li>Access historical data that supports our expert recommendations<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The performance of growth stocks outpaced the market in 2023 and early 2024\u2014but will interest rates and inflation put an end to their dominance?<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-13217","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13217"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13217\/revisions"}],"predecessor-version":[{"id":13219,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13217\/revisions\/13219"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}