The stock market saw an impressive bounce back in trading on Monday after a tumultuous week of sell-offs. Gains were seen across the board, with growth stocks particularly shining in the short covering rally.
Growth stocks, known for their high valuation tactics and aggressive expansion plans, are seen by some investors as providing more potential gains over a long-term horizon. This was reflective in their gains on Monday, with technology and communication stocks leading the way, while healthcare and financial services shares saw more modest upticks.
The surge in growth stocks increased the value of the S&P 500 Growth index by 3.1 percent, while the S&P 500 Value Index inched up just 0.4 percent.
Gains were bolstered by reports that the U.S. economy was starting to see some post-lockdown improvements. This helped to assuage investors’ fears concerning the hit the pandemic was taking on the global economy.
High-performing stocks such as Amazon, Microsoft, and Tesla – all of which have outpaced the market this year – saw a commensurate uptick, helping to stabilize the market after weeks of selling pressure.
The market appears to be cautiously optimistic that the economy can continue to slowly recover, and that further government support will help to smooth the road for businesses and consumers.
It would appear that growth stocks still have the potential to capture outsized returns for those brave enough to take the gamble. With volatility likely to remain a factor despite the brief respite of Monday’s surge, investors should remain aware of their ever-shifting circumstances and adjust their portfolios accordingly.