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The Dow Jones Industrial Average Index has been underperforming the other two major indices this year. It has gained 1.7% over the past three months. SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, is up 2.5%.
The second-quarter 2023 earnings season will kick off this week, with the banking sector due to report numbers. Earnings estimates have been stabilizing after consistently coming down for almost a year and have started to go up for some key sectors. A combination of favorable macroeconomic developments and optimism about the transformational power of artificial intelligence appears to be driving market optimism.
Total S&P 500 earnings are expected to be down 9.7% from the same period last year on 0.5% lower revenues, per the latest Earnings Trends, representing the third consecutive quarter of earnings decline following the 3.4% decline in the first quarter and the 5.4% drop in the fourth quarter of 2022. Though estimates have come down from the 7.2% earnings decline projected at the start of the second quarter, the magnitude of negative revision is smaller relative to the recent comparable periods
Of the 16 Zacks sectors, five are expected to post earnings growth in the second quarter, with the Consumer Discretionary (11.3%) sector recording the strongest growth. This would be followed by Financials (10.9%), Industrial Products (4.7%), Retail (4.5%) and Business Services (1.3%) (read: 4 Sector ETFs to Capitalize on Q2 Earnings Potential).
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 $28.7 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 9% share. Financials (20.3%), information technology (18.5%), healthcare (18.3%), industrials (15.1%) and consumer discretionary (13.8%) 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 the next. JPMorgan Chase (JPM) and UnitedHealth (UNH) are expected to report on Jul 14, while Goldman (GS) and International Business Machines (IBM) will announce earnings on Jul 19. Johnson & Johnson (JNJ) is scheduled to report on Jul 20, while Dow Inc. (DOW) will report on Jul 25. Intel (INTC) is expected to release earnings on Jul 27.
Let’s delve deeper into the second-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 an Earnings ESP of -1.61% and a Zacks Rank #2. The stock has seen a positive earnings estimate revision of six cents over the past 30 days for the to-be-reported quarter. Analysts increasing estimates right before earnings — with the most up-to-date information — is a good indicator for the stock. JPM delivered an earnings surprise of 9.32%, on average, in the last four quarters (read: How Will Bank ETFs Perform in Light of Q2 Earnings?).
UnitedHealth has an Earnings ESP of -1.41% and a Zacks Rank #3. The stock has witnessed a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter. It delivered an earnings surprise of 4.04%, on average, over the last four quarters.
Goldman has an Earnings ESP of -36.18% and a Zacks Rank #3. The stock has witnessed a negative earnings estimate revision of $4.27 over the past 30 days for the to-be-reported quarter. GS’ earnings surprise track over the preceding four quarters is also not good, with the average negative surprise being 1.94%.
International Business Machines has an Earnings ESP of +1.58% and a Zacks Rank #3. The stock saw a positive earnings estimate revision of a penny in the past 30 days for the to-be-reported quarter. IBM delivered an earnings surprise of 2.34%, on average, in the last four quarters.
Johnson & Johnson has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The stock saw 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 3.96%.
Dow has an Earnings ESP of +3.73% and a Zacks Rank #4. The stock has seen a negative earnings estimate revision of 25 cents over the past 30 days for the to-be-reported quarter. DOW came up with a beat in three of the last four quarters, the average being 13.29%.
Intel has an Earnings ESP of +21.05% and a Zacks Rank #2. The stock has witnessed a positive earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 10.14%, on average, over the last four quarters.
Bottom Line
With some of the blue-chip companies having reasonable chances of coming up with an earnings surprise, investors should closely monitor the movement of the Dow ETF and grab any opportunity that arises from a surge in any of the 30 stocks.
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Will Q2 Earnings Drive Dow ETFs Higher?
The Dow Jones Industrial Average Index has been underperforming the other two major indices this year. It has gained 1.7% over the past three months. SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, is up 2.5%.
The second-quarter 2023 earnings season will kick off this week, with the banking sector due to report numbers. Earnings estimates have been stabilizing after consistently coming down for almost a year and have started to go up for some key sectors. A combination of favorable macroeconomic developments and optimism about the transformational power of artificial intelligence appears to be driving market optimism.
Total S&P 500 earnings are expected to be down 9.7% from the same period last year on 0.5% lower revenues, per the latest Earnings Trends, representing the third consecutive quarter of earnings decline following the 3.4% decline in the first quarter and the 5.4% drop in the fourth quarter of 2022. Though estimates have come down from the 7.2% earnings decline projected at the start of the second quarter, the magnitude of negative revision is smaller relative to the recent comparable periods
Of the 16 Zacks sectors, five are expected to post earnings growth in the second quarter, with the Consumer Discretionary (11.3%) sector recording the strongest growth. This would be followed by Financials (10.9%), Industrial Products (4.7%), Retail (4.5%) and Business Services (1.3%) (read: 4 Sector ETFs to Capitalize on Q2 Earnings Potential).
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 $28.7 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 9% share. Financials (20.3%), information technology (18.5%), healthcare (18.3%), industrials (15.1%) and consumer discretionary (13.8%) 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 the next. JPMorgan Chase (JPM) and UnitedHealth (UNH) are expected to report on Jul 14, while Goldman (GS) and International Business Machines (IBM) will announce earnings on Jul 19. Johnson & Johnson (JNJ) is scheduled to report on Jul 20, while Dow Inc. (DOW) will report on Jul 25. Intel (INTC) is expected to release earnings on Jul 27.
Let’s delve deeper into the second-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 an Earnings ESP of -1.61% and a Zacks Rank #2. The stock has seen a positive earnings estimate revision of six cents over the past 30 days for the to-be-reported quarter. Analysts increasing estimates right before earnings — with the most up-to-date information — is a good indicator for the stock. JPM delivered an earnings surprise of 9.32%, on average, in the last four quarters (read: How Will Bank ETFs Perform in Light of Q2 Earnings?).
UnitedHealth has an Earnings ESP of -1.41% and a Zacks Rank #3. The stock has witnessed a negative earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter. It delivered an earnings surprise of 4.04%, on average, over the last four quarters.
Goldman has an Earnings ESP of -36.18% and a Zacks Rank #3. The stock has witnessed a negative earnings estimate revision of $4.27 over the past 30 days for the to-be-reported quarter. GS’ earnings surprise track over the preceding four quarters is also not good, with the average negative surprise being 1.94%.
International Business Machines has an Earnings ESP of +1.58% and a Zacks Rank #3. The stock saw a positive earnings estimate revision of a penny in the past 30 days for the to-be-reported quarter. IBM delivered an earnings surprise of 2.34%, on average, in the last four quarters.
Johnson & Johnson has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The stock saw 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 3.96%.
Dow has an Earnings ESP of +3.73% and a Zacks Rank #4. The stock has seen a negative earnings estimate revision of 25 cents over the past 30 days for the to-be-reported quarter. DOW came up with a beat in three of the last four quarters, the average being 13.29%.
Intel has an Earnings ESP of +21.05% and a Zacks Rank #2. The stock has witnessed a positive earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 10.14%, on average, over the last four quarters.
Bottom Line
With some of the blue-chip companies having reasonable chances of coming up with an earnings surprise, investors should closely monitor the movement of the Dow ETF and grab any opportunity that arises from a surge in any of the 30 stocks.