Fed to Cut Rates Ahead? Growth ETFs to Play

Group 1: Labor Market Insights - The labor market in the U.S. is showing signs of weakness, with only 73,000 jobs added in July and an unemployment rate rising to 4.2% [2] - The three-month average job gains have dropped to just 35,000, indicating a slowdown in hiring [2] - Fed President Mary Daly expressed concern that further slowing in the labor market could lead to a rapid decline [2] Group 2: Inflation and Tariffs - Tariffs are expected to temporarily increase inflation, but Daly does not foresee a lasting impact [3] - Underlying inflation, excluding tariffs, has been gradually decreasing and is expected to continue this trend due to restrictive monetary policy and a slowing economy [3] Group 3: Federal Reserve's Stance - Fed Chair Jerome Powell has stated that no decision has been made regarding a potential rate cut in September, emphasizing the need to monitor tariff impacts closely [4] - New York Fed President John Williams acknowledged the job market remains solid but expressed concern over downward revisions in hiring [4] Group 4: Investment Opportunities in Growth Stocks - Growth stocks are likely to perform better in a low-rate environment, as lower borrowing costs facilitate company expansion [5] - The attractiveness of fixed-income investments diminishes with lower rates, prompting investors to seek higher returns in equity markets [5] Group 5: Recommended ETFs - Several top-ranked growth-based exchange-traded funds (ETFs) are highlighted for potential investment if the Fed begins cutting rates: - Vanguard Growth ETF (VUG) – Zacks Rank 1 (Strong Buy) [6] - Invesco S&P 500 Pure Growth ETF (RPG) – Zacks Rank 2 (Buy) [6] - Invesco Large Cap Growth ETF (PWB) – Zacks Rank 1 [6] - Vanguard S&P 500 Growth ETF (VOOG) – Zacks Rank 1 [6] - iShares S&P 500 Growth ETF (IVW) – Zacks Rank 1 [6]