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ETFs to Play Dow Jones' Best Start to October Since 2003

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The Dow Jones recorded its best start to October since 2003. SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) rose 1.45% on Oct 1. The blue-chip 30-stock index is hovering around the 34,326.46-level. The Dow Jones is up 11.3% this year. Still, the index has been the underperformer compared with the S&P 500 (up 15.4%) and the Nasdaq (12.3%).

Let’s delve into what drove the recent surge in the Dow Jones.

Merck Shares Rally

Merck & Co. Inc. (MRK - Free Report) shares gained 8.4% on Oct 1, 2021 on news of success in its COVID treatment. The company reported that its oral antiviral medication molnupiravir lowered the risk of COVID-19 hospitalization or death by 50% in a Phase 3 study of patients with mild or moderate symptoms. Merck shares account for about 1.46% of the Dow Jones.

Uptick in U.S. Manufacturing Activity

The U.S. manufacturing index rose to 61.1 in September from 59.9 in August. Readings above the neutral level of 50.0 indicate expansion in a sector. The reading has increased for a second straight month and above market expectations of 59.6. The latest reading signaled one of the strongest rates of expansion since 1983, boosted by solid increases in production (59.4 vs 60.0 in August) and new orders.

“Business Survey Committee panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand," Timothy Fiore, chair of the Institute for Supply Management, said in a press release. Overcoming the supply chain issues has been great for the manufacturing industry.

Expectations of Upbeat Holiday Sales (Especially Online)

Online retail sales breached all records in 2020. This year online sales are expected to grow further, up to 10% in the United States and 7% around the globe. Consumers are likely to pay 20% more for their holiday gifts as retailers and manufacturers will have to undergo an extra $223 billion in the cost of goods, per a source.

Oil Rally

Furthermore, it has been noticed lately that the Dow Jones shares a deep relationship with oil price movement. Though the energy sector rally spreads optimism over the broader market as a whole, in most cases, on a particular day of oil surge, the rise in the Dow Jones is steeper than that of the S&P 500, or vice versa. Past month, WTI crude fund United States Oil Fund, LP (USO - Free Report) added about 8.8%. USO, in fact, gained 1.33%.

DIA in Focus

This is one of the largest and most-popular ETFs in the large-cap space with AUM of $28.86 billion and average daily volume of 4 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 7.65% share.

Information technology (22.6%), financials (16.8%), healthcare (16.3%), industrials (15.6%) and consumer discretionary (13.9%) are the top five sectors. DIA charges 16 bps in annual fees.

Guggenheim Dow Jones Industrial Average Dividend ETF (DJD - Free Report)

The underlying Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. The $168.3 million-fund charges 7 bps in fees.

iShares Dow Jones U.S. ETF (IYY - Free Report)

The underlying Dow Jones U.S. Index serves as the underlying index in the Dow Jones U.S. Large-Cap Index, Dow Jones U.S. Mid-Cap Index, Dow Jones U.S. Small-Cap Index and the Dow Jones U.S. sector indices. The Dow Jones U.S. Total Market Index represents 88% of the market capitalization of listed U.S. equities. The $1.68 billion-fund charges 20 bps in fees.

ProShares Ultra Dow30 (DDM - Free Report)

ProShares Ultra Dow30 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Dow Jones Industrial Average. The $445.9 million-fund charges 95 bps in fees.

ProShares UltraPro Dow30 (UDOW - Free Report)

The ProShares UltraPro Dow30 seeks daily investment results, before fees and expenses, that correspond to triple (300%) the daily performance of the Dow Jones Industrial Average. The $924.6 million-fund charges 95 bps in fees.