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After the worst first nine months of 2022, the Dow Jones Industrial Average showed some stability at the start of the fourth quarter. Worries about stubbornly hot inflation and the Fed’s rapid tightening policy to tame inflation have led to risk-off trade.
The blue-chip index gained 1.7% so far this quarter, and SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, is also up 1%. The trend is likely to continue heading into the earnings season.
Third-quarter 2022 earnings are set to kick off this week, with the banking sector slated to report numbers. Total S&P 500 earnings are expected to be up 0.7% from the same period last year on 9.1% higher revenues. The earnings growth is down from 7.2% at the start of the third quarter. In addition to inflation, logistical challenges and macroeconomic uncertainty, which have been recurring themes in the last couple of quarterly reporting cycles, a strong U.S. dollar is also acting as a headwind this earnings season (read: 5 Favorite Sectors of Q3 Earnings and Their ETFs).
Of the 16 Zacks sectors, eight are expected to have recorded positive earnings growth in the third quarter, with the strongest gains in energy (up 113.2%). This will be followed by transportation (48.1%), autos (31.6%), consumer discretionary (22.2%) and construction (24.5%) sectors.
DIA in Focus
SPDR Dow Jones Industrial Average ETF Trust is one of the largest and most popular ETFs in the large-cap space, with an AUM of $26.2 billion and an average daily volume of 3 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each holding less than 11.4% share. Healthcare (22.1%), information technology (20.1%), financials (15.8%), consumer discretionary (13.6%) and industrials (13.2%) are the top five sectors.
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk.
Nearly one-fourth of the blue-chip firms are expected to announce results this week and next. JPMorgan Chase (JPM - Free Report) and UnitedHealth (UNH - Free Report) are expected to report on Oct 14, while Johnson & Johnson (JNJ - Free Report) will announce earnings on Oct 18. International Business Machines (IBM - Free Report) is scheduled to report on Oct 19, while Goldman (GS - Free Report) will report on Oct 21. Dow Inc. (DOW - Free Report) and Intel (INTC - Free Report) will release earnings on Oct 20 and Oct 27, respectively.
Let’s delve deeper into the third-quarter earnings picture that will likely aid the fund in the coming days.
Earnings Whispers
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
JPMorgan has a Zacks Rank #2 and an Earnings ESP of -0.50%. The stock has seen a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information — is a good indicator for the stock. JPM delivered an earnings surprise of 7.40%, on average, in the last four quarters (read: 5 Top-Ranked Sector ETFs to Buy for Q4).
UnitedHealth has a Zacks Rank #3 and an Earnings ESP of +0.35%. The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 3.66%, on average, over the last four quarters.
Johnson & Johnson has a Zacks Rank #3 and an Earnings ESP of -0.05%. The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter. JNJ’s earnings surprise track over the preceding four quarters was also robust, the average being 3.41%.
International Business Machines has a Zacks Rank #4 (Sell) and an Earnings ESP of -10.93%. The stock has seen zero earnings estimate revision in the past 30 days for the to-be-reported quarter. IBM delivered an earnings surprise of 1.34%, on average, in the last four quarters.
Goldman has a Zacks Rank #4 and an Earnings ESP of +1.89%. The stock has witnessed a negative earnings estimate revision of 37 cents over the past seven days for the to-be-reported quarter. GS’ earnings surprise track over the preceding four quarters was robust, the average being 19.39%.
Dow has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -15.52%. The stock has seen a negative earnings estimate revision of 4 cents over the past seven days for the to-be-reported quarter. DOW came up with a beat in each of the last four quarters, the average being 8.74%.
Intel has a Zacks Rank #5 and an Earnings ESP of -6.86%. The stock has witnessed a negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 6.49%, on average, over the last four quarters (read: Least-Hurt Tech ETFs From Worst Stretch Since COVID Outbreak).
Bottom Line
With some of the blue-chip companies expected to report an earnings surprise, investors should closely monitor the movement of the Dow ETF and grab an opportunity that arises from a surge in any of the 30 stocks.
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Dow ETFs in Focus Ahead of Q3 Earnings
After the worst first nine months of 2022, the Dow Jones Industrial Average showed some stability at the start of the fourth quarter. Worries about stubbornly hot inflation and the Fed’s rapid tightening policy to tame inflation have led to risk-off trade.
The blue-chip index gained 1.7% so far this quarter, and SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, is also up 1%. The trend is likely to continue heading into the earnings season.
Third-quarter 2022 earnings are set to kick off this week, with the banking sector slated to report numbers. Total S&P 500 earnings are expected to be up 0.7% from the same period last year on 9.1% higher revenues. The earnings growth is down from 7.2% at the start of the third quarter. In addition to inflation, logistical challenges and macroeconomic uncertainty, which have been recurring themes in the last couple of quarterly reporting cycles, a strong U.S. dollar is also acting as a headwind this earnings season (read: 5 Favorite Sectors of Q3 Earnings and Their ETFs).
Of the 16 Zacks sectors, eight are expected to have recorded positive earnings growth in the third quarter, with the strongest gains in energy (up 113.2%). This will be followed by transportation (48.1%), autos (31.6%), consumer discretionary (22.2%) and construction (24.5%) sectors.
DIA in Focus
SPDR Dow Jones Industrial Average ETF Trust is one of the largest and most popular ETFs in the large-cap space, with an AUM of $26.2 billion and an average daily volume of 3 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each holding less than 11.4% share. Healthcare (22.1%), information technology (20.1%), financials (15.8%), consumer discretionary (13.6%) and industrials (13.2%) are the top five sectors.
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk.
Nearly one-fourth of the blue-chip firms are expected to announce results this week and next. JPMorgan Chase (JPM - Free Report) and UnitedHealth (UNH - Free Report) are expected to report on Oct 14, while Johnson & Johnson (JNJ - Free Report) will announce earnings on Oct 18. International Business Machines (IBM - Free Report) is scheduled to report on Oct 19, while Goldman (GS - Free Report) will report on Oct 21. Dow Inc. (DOW - Free Report) and Intel (INTC - Free Report) will release earnings on Oct 20 and Oct 27, respectively.
Let’s delve deeper into the third-quarter earnings picture that will likely aid the fund in the coming days.
Earnings Whispers
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
JPMorgan has a Zacks Rank #2 and an Earnings ESP of -0.50%. The stock has seen a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information — is a good indicator for the stock. JPM delivered an earnings surprise of 7.40%, on average, in the last four quarters (read: 5 Top-Ranked Sector ETFs to Buy for Q4).
UnitedHealth has a Zacks Rank #3 and an Earnings ESP of +0.35%. The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 3.66%, on average, over the last four quarters.
Johnson & Johnson has a Zacks Rank #3 and an Earnings ESP of -0.05%. The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter. JNJ’s earnings surprise track over the preceding four quarters was also robust, the average being 3.41%.
International Business Machines has a Zacks Rank #4 (Sell) and an Earnings ESP of -10.93%. The stock has seen zero earnings estimate revision in the past 30 days for the to-be-reported quarter. IBM delivered an earnings surprise of 1.34%, on average, in the last four quarters.
Goldman has a Zacks Rank #4 and an Earnings ESP of +1.89%. The stock has witnessed a negative earnings estimate revision of 37 cents over the past seven days for the to-be-reported quarter. GS’ earnings surprise track over the preceding four quarters was robust, the average being 19.39%.
Dow has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -15.52%. The stock has seen a negative earnings estimate revision of 4 cents over the past seven days for the to-be-reported quarter. DOW came up with a beat in each of the last four quarters, the average being 8.74%.
Intel has a Zacks Rank #5 and an Earnings ESP of -6.86%. The stock has witnessed a negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 6.49%, on average, over the last four quarters (read: Least-Hurt Tech ETFs From Worst Stretch Since COVID Outbreak).
Bottom Line
With some of the blue-chip companies expected to report an earnings surprise, investors should closely monitor the movement of the Dow ETF and grab an opportunity that arises from a surge in any of the 30 stocks.