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Dow Tops 32,000 for the First Time: 5 Best Stocks in the ETF

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Wall Street has been witnessing volatility lately driven by surging bond yields, which has sparked inflation fears. While the S&P 500 and the Nasdaq Composite Index have been taking a hit from the tech and high-growth sell-offs, Dow Jones is roaring higher with cyclical sectors back in favor. The blue-chip index, which has significant exposure to these sectors, touched 32,000 for the first time (read: Yields Head for Big Monthly Gain: ETFs to Win & Lose).

This is especially true as rising yields is an indicator of economic improvement. Investors are betting on the stocks that are poised to gain most from the recovering economy backed by faster vaccine deployment, continued progress on more vaccines and hopes of further stimulus. With COVID-19 cases falling globally in the recent weeks, lockdown measures and economic restrictions are being lifted, providing impetus to the economy. Strong corporate earnings as well as signs of a healing labor market also bode well for the economic growth that would lead to outperformance of cyclical sectors.

The Fed in its latest testimony signaled that it would continue to remain accommodative with its near-zero interest rates and monthly bond purchases.

Given this, SPDR Dow Jones Industrial Average ETF (DIA - Free Report) tracking the Dow Jones Index also hit new record highs, gaining 4.7% so far this year. Let’s take a closer look at the fundamentals of DIA and its performance.

DIA in Focus

This is one of the largest and most popular ETFs in the large-cap space with AUM of $26.3 billion and average daily volume of 2.8 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 7% share. Information technology (21.6%), industrials (17.3%), healthcare (16.5%), financials (15.9%) and consumer discretionary (12.5%) are the top five sectors. DIA charges 16 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Cyclical ETFs to Gain Amid the Bullish Market Scenario).   

Though most stocks in the fund’s portfolio were in the green over the past week, we have highlighted the five best-performing stocks in the ETF:

Best Performing Stocks of DIA

Dow Inc. (DOW - Free Report) : This stock takes 1.3% allocation in the fund’s basket and has gained about 10% over the past week. The stock witnessed solid earnings estimate revision of 10 cents for this year over the past week and has an estimated year-over-year earnings growth of 106.6%. Dow carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Caterpillar Inc. (CAT - Free Report) : The stock has gained about 10% over the past week and occupies the eight position in the fund basket with 4.6% share. It saw no earnings estimate revision for this year over the past week and has an estimated year-over-year earnings growth of 21.3%. The stock has a Zacks Rank #2.

American Express Company (AXP - Free Report) : This stock takes 2.9% allocation in the fund’s basket and climbed about 9% over a week. The stock witnessed no earnings estimate activity for this year over the past week and has an estimated year-over-year earnings growth of 21%. It has a Zacks Rank #4 (Sell).

Chevron Corporation (CVX - Free Report) : This stock makes up for 2.2% allocation in the DIA portfolio and has gained 7.7% over the past week. The stock witnessed solid earnings estimate revision of 26 cents for this year over the past seven days. It is expected to record massive year-over-year earnings growth of more than 1000%. Chevron has a Zacks Rank #3 (Hold) (read: Energy ETFs in Focus Post Exxon, Chevron Q4 Earnings).

The Boeing Company (BA - Free Report) : The stock has gained 6.4% over the past week. It saw no earnings estimate revision for this year over the past week and has an expected earnings growth of 101.2%. Boeing currently has a Zacks Rank #4 and takes the seventh spot in DIA portfolio with 4.7% exposure.

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