this pullback in growth stocks offers investors an opportunity. The rise in short-term rates may soon be over, as forward-looking inflation measures are moderating at a rapid pace. Further, after the recent steep pullback, many growth stocks have reached more attractive valuation levels. Therefore, investors should consider buying the dip in these 3 top growth stocks: Alphabet (NASDAQ:GOOGL), Workday (NASDAQ:WDAY), and Expedia (NASDAQ:EXPE).Recently, the market has experienced increased volatility, with a major factor being the Fed’s hawkish pivot. The Fed seems to be more focused on combating inflation, and the market is now expecting at least 2 rate hikes next year. As a result, the yield on the 2-Year Treasury Note has moved up from 0.15% in June to 0.667%. Rising short-term rates are a headwind for growth stocks that perform their best in environments where rates are declining.
So, it’s not surprising that growth stocks led the market to the downside last week. A good example is the ARK Innovation ETF (ARKK) which is down more than 19% in just the past month. In contrast, the S&P 500 and Nasdaq are down 0.64% and 2.25%, respectively.
However, I believe this pullback in growth stocks offers investors an opportunity. The rise in short-term rates may soon be over, as forward-looking inflation measures are moderating at a rapid pace. Further, after the recent steep pullback, many growth stocks have reached more attractive valuation levels. Therefore, investors should consider buying the dip in these 3 top growth stocks: Alphabet (GOOGL), Workday (WDAY), and Expedia (EXPE).