UPDATE 1-ARK Invest's Cathie Wood looks past rising consumer prices to focus on deflation

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By David Randall

NEW YORK, July 13 (Reuters) - Deflation will likely become a larger force in financial markets in the year ahead despite the recent spike in consumer prices to 13-year highs, star stockpicker Cathie Wood of Ark Invest said in a webinar on Tuesday.

U.S. consumer prices increased by the most in 13 years in June due in part to supply constraints, the Labor Department said on Tuesday.

Wood, whose Ark Innovation ETF was the top-performing U.S. equity fund tracked by Morningstar last year, said technological innovation would continue to push down prices significantly.

"The message we continue to pound the table on is that nominal GDP growth, because of these deflationary forces, will be surprisingly low," said Wood.

As a result, 10-year Treasury yields will likely stay below 3% for the foreseeable future, pushing up the broad valuation of the U.S. stock market, she said.

"I believe the bond market is in a bubble," Wood said, adding that "too many people are afraid of inflation" which is a "killer" for stock market valuations.

Any further rallies in oil prices will likely lead to a sharper sell-off in the future as demand withers and more consumers opt for electric vehicles, Wood said.

"We would not be on the long side of oil," Wood said.

ARK remains bullish on the online betting market and estimates that the U.S. market will grow from $9.5 billion to $37 billion by 2025. The fund has a position in DraftKings Inc , which is up 7.2% for the year to date.

Wood's $23.6 billion ARK Innovation ETF suffered steep declines earlier this year as investors rotated away from growth and technology stocks to more cyclical sectors such as financials and energy. But it has gained 7.4% over the last month as Treasury yields edge lower.

The fund is up 0.2% for the year, a performance that puts it in the bottom 98th percentile of the 595 U.S. mid-cap growth funds, according to Morningstar data.

(Reporting by David Randall Editing by Sonya Hepinstall)