While 2022 was challenging for equity markets, growth stocks rebounded in the first half of 2023, driven by resilient corporate earnings, moderating inflation, and strong consumer demand. Growth stocks generally tend to face downward pressure in an inflationary environment, particularly when the speed of interest rate hikes is rapid, which was the primary culprit for weak equity performance in 2022. But receding inflation, signs of slowing economic growth, and the Fed signalling a rate-hike pause fueled a rotation back toward growth stocks with solid earnings and durable revenue growth.
