Back to top

Image: Bigstock

Stocks in Focus on Dow Jones ETF's First 9-Day Run Since 2017

Read MoreHide Full Article

Since last week, the Dow Jones index has been performing very well. The index jumped more than 150 points yesterday to log its first nine-day rally since 2017, per a CNBC article. Better-than-expected earnings results from drugmaker Johnson & Johnson (JNJ - Free Report) boosted the index on Jul 20.

Moreover, Dow Jones companies have come up with upbeat results this reporting cycle while tech biggies like Netflix (NFLX) and Tesla (TSLA) slumped post earnings release. SPDR Dow Jones Industrial Average ETF (DIA - Free Report) has added about 3.8% past month versus a 3.5% uptick in the S&P 500 (as of Jul 20, 2023) while DIA is up 2.4% in the past week versus 0.6% increase seen in the S&P 500.

Rising Bond Yields: A Tailwind for Dow Jones

If this was not enough, a spike in long-term U.S. treasury bond yields helped the value-centric Dow Jones gain precedence over the growth-oriented Nasdaq. The benchmark U.S. treasury yield was 3.85% on Jul 20, 2023, up 10 bps from the day before.

Since value stocks perform better in a rising rate environment than growth stocks, Dow Jones had every reason to record jump yesterday. The trend is likely to be the same as the Fed is likely to hike rates this month amid a resilient economy and sticky inflation.

Inside the Stocks That Played a Crucial Role

Below we highlight a few stocks that played a crucial role in the Dow Jones’ latest rally. These stocks will likely help the Dow Jones to keep the momentum going.

JPMorgan Chase & Co. (JPM - Free Report) ) – Up 8.3% in Past Nine Days

The Zacks Rank #1 (Strong Buy) company is one of the biggest global banks. JPMorgan's shares have outperformed the industry in the past six months. The company acquired failed First Republic Bank for $10.6 billion, which is expected to be accretive to earnings.

A resilient U.S. consumer base will likely help the bank as it has extensive consumer franchises. Increased credit card borrowing, higher loan charges, and robust consumer spending will likely act as strength for J.P. Morgan. Overall, higher rates, global expansion initiatives and a decent loan demand will support net interest income (NII). The stock has a Top Momentum Score of “A”.

UnitedHealth Group (UNH - Free Report) ) – Up 9.3% in Past Nine Days

The Zacks Rank #3 (Hold) company provides a wide range of health care products and services, such as health maintenance organizations (HMOs), point of service plans (POS), preferred provider organizations (PPOs), and managed fee-for-service programs. UnitedHealth beat on both lines in the second-quarter 2023 earnings reporting season.

On the basis of solid performance exhibited in the first half of 2023, adjusted net EPS is presently anticipated within $24.70 and $25.00, compared with the prior guidance of $24.50-$25.00. Net EPS are projected to lie between $23.45 and $23.75, compared with the previous view of $23.25-$23.75. The stock has a Top-rated Value score of “A” and Growth Score of “B.”

Johnson & Johnson (JNJ - Free Report) – Up 5.7% in Past Nine Days

The Zacks Rank #3 pharma company’s biggest strength is its diversified business model. It operates through pharmaceuticals, medical devices and consumer products divisions. The company beat on both lines in the ongoing earnings season. The company also hiked its full-year guidance.

J&J is now forecasting full-year sales of $98.80 billion to $99.80 billion, about $1 billion higher than the guidance provided in April. The company lifted its 2023 adjusted earnings outlook to $10.70 to $10.80 per share, from a previous forecast of $10.60 to $10.70 per share. J&J has upbeat Value & Growth score of “B.”

Salesforce (CRM - Free Report) ) – Up 9.1% in Past Nine Days

The Zacks Rank #1 (Strong Buy) company is the leading provider of on-demand Customer Relationship Management (CRM - Free Report) software, which enables organizations to better manage critical operations, such as sales force automation, customer service and support, marketing automation, document management, analytics and custom application development.

Salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation. Its sustained focus on introducing more aligned products as per customer needs is driving its top-line. Continued deal wins in the international market is another growth driver. The stock has a Growth Score of “A.” But the stock is not a value product.

Published in