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October Marks Best Month for Dow Since 1976: ETFs in Focus
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The Dow Jones Industrial Average has just logged its best month since 1976, per CNBC. The Dow is up 14% in October, which would be its best month since 1976. The S&P 500 and Nasdaq Composite are also up for the month, which helped Wall Street to snap a two-month losing streak.
Notably, the Dow Jones (down 9.6%) has beaten the S&P 500 (down 18.2%) and the Nasdaq (down 29%) this year as rates rose to tame high inflation. This happens because lenders demand higher interest rates to make up for the decline in purchasing power of the money that lenders will be repaid in the future. And rising rates are good for value stocks than the growth ones as the latter’s cash flows come way out in the future.
Dow Jones Rich With Value Stocks
The Dow Jones seems to be more immune to inflationary threats. The index has a better value quotient (0.14) than the S&P 500 (0.03), per etf.com. Investors should note that among big three U.S. indexes, the Nasdaq seems to be the least immune to inflation as the index is tech heavy with about 60% exposure. The tech sector is high-growth in nature and thus the Nasdaq Composite tends to slide the most in a day that reports a spike in inflation. This explains the Nasdaq’s horrible performance this year.
Favorable Sectoral Exposure
Plus, the Dow Jones has highest exposure (22.08%) to Healthcare stocks. Healthcare stocks are recession-proof in nature. The Dow Jones also has some industrials and consumer discretionary companies in its kitty. These are economically-sensitive sectors and often perform better in a rising rate environment.
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. WTI crude fund United States Oil Fund, LP (USO - Free Report) has added about 16.5% past month
Cheaper Valuation
At the current level, Dow Jones has a P/E of 18.55X while the S&P 500 has a P/E of 21.70X. This has happened because the Dow Jones suffered a lot in the peak of the pandemic.
Dow Jones-Based ETFs in Focus
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report)
This is one of the largest and most-popular ETFs in the large-cap space with AUM of $28.28 billion and average daily volume of 3.5 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 11.07% share. 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 $244.3 million-fund charges 7 bps in fees.
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 $1.47 billion-fund charges 20 bps in fees.
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 $330.9 million-fund charges 95 bps in fees.
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 $600 million-fund charges 95 bps in fees.
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October Marks Best Month for Dow Since 1976: ETFs in Focus
The Dow Jones Industrial Average has just logged its best month since 1976, per CNBC. The Dow is up 14% in October, which would be its best month since 1976. The S&P 500 and Nasdaq Composite are also up for the month, which helped Wall Street to snap a two-month losing streak.
Notably, the Dow Jones (down 9.6%) has beaten the S&P 500 (down 18.2%) and the Nasdaq (down 29%) this year as rates rose to tame high inflation. This happens because lenders demand higher interest rates to make up for the decline in purchasing power of the money that lenders will be repaid in the future. And rising rates are good for value stocks than the growth ones as the latter’s cash flows come way out in the future.
Dow Jones Rich With Value Stocks
The Dow Jones seems to be more immune to inflationary threats. The index has a better value quotient (0.14) than the S&P 500 (0.03), per etf.com. Investors should note that among big three U.S. indexes, the Nasdaq seems to be the least immune to inflation as the index is tech heavy with about 60% exposure. The tech sector is high-growth in nature and thus the Nasdaq Composite tends to slide the most in a day that reports a spike in inflation. This explains the Nasdaq’s horrible performance this year.
Favorable Sectoral Exposure
Plus, the Dow Jones has highest exposure (22.08%) to Healthcare stocks. Healthcare stocks are recession-proof in nature. The Dow Jones also has some industrials and consumer discretionary companies in its kitty. These are economically-sensitive sectors and often perform better in a rising rate environment.
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. WTI crude fund United States Oil Fund, LP (USO - Free Report) has added about 16.5% past month
Cheaper Valuation
At the current level, Dow Jones has a P/E of 18.55X while the S&P 500 has a P/E of 21.70X. This has happened because the Dow Jones suffered a lot in the peak of the pandemic.
Dow Jones-Based ETFs in Focus
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report)
This is one of the largest and most-popular ETFs in the large-cap space with AUM of $28.28 billion and average daily volume of 3.5 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 11.07% share. 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 $244.3 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 $1.47 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 $330.9 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 $600 million-fund charges 95 bps in fees.