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Amid the ongoing broad market rally driven by the anticipation that the Fed is nearing the end of its interest rate hike cycle, the Dow Jones Industrial Average is catching up pretty well, hitting its highest levels since January last year. The blue-chip index has been outperforming over the past three months, rising 5.8% compared with a 3.9% increase for the broad market index, S&P 500.
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, also gained 5.8% in the same timeframe. While most of the stocks in the ETF portfolio made a strong comeback in recent months, we have highlighted five that have been leading the way higher. These include NIKE Inc. (NKE - Free Report) , Boeing (BA - Free Report) , Salesforce Inc. (CRM - Free Report) , UnitedHealth Group Inc. (UNH - Free Report) and Intel Corporation (INTC - Free Report) .
Being cyclical in nature, the blue-chip index outperforms when economic growth improves. Americans are now feeling more confident about the economy than they did over the past few months. This is especially true as consumer sentiment, as indicated by the preliminary reading on the University of Michigan preliminary index, rebounded sharply in early December and broke the streak of four consecutive months of decline (read: ETFs Set to Gain Amid Robust Holiday Consumer Sentiment).
Inflation is also slowing, which will eventually lead to potential cuts in short-term interest rates by the Fed, leading to more growth. Notably, inflation edged down for the second consecutive month in November, driven by a drop in energy prices.
The outperformance came as the rally broadened out in recent weeks after the astounding surge of the “Magnificent Seven” stocks. Cyclical stocks, bank stocks and small-cap stocks have all shown an upward trend, indicating that the market is in a state of expansion, supporting the uptrend in equities (read: Magnificent Seven ETFs: A Review of 2023 & What Lies Ahead).
According to Bespoke, the Dow Jones has notched an all-time high on a total return basis, which includes dividend payments. The index is up 12% this year on a total return basis.
DIA in Focus
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with AUM of $31.3 billion and an average daily volume of 3.6 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket with each making up for less than 10% share. Financials (20.3%), healthcare (19.6%), information technology (19.5%), industrials (14.6%) and consumer discretionary (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 outlook.
Best-Performing Stocks of DIA
NIKE Inc. is engaged in the business of designing, developing and marketing of athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. It has gained more than 24% over the past three months and accounts for 2.1% in the fund’s basket.
NIKE is expected to see an earnings growth of 15.79% for the fiscal year (ending May 2024) and has a Zacks Rank #2 (Buy).
Boeing has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft along with varied defense products position it as one of the largest defense contractors in the United States. It has a solid estimated earnings growth of 159.5% for 2024.
Boeing has risen 18% in the past three months and accounts for 4.5% of DIA. The stock has a Zacks Rank #3 (Hold) and a Growth Score of A.
Salesforce is the leading provider of on-demand Customer Relationship Management 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. The stock has risen 15.7% in the past three months and accounts for 4.5% in the fund’s basket.
Salesforce has an expected earnings growth rate of 16% for the fiscal year (ending January 2025). It has a Zacks Rank #3 and a Growth Score of B.
UnitedHealth provides a wide range of healthcare products and services, such as health maintenance organizations, point-of-service plans, preferred provider organizations and managed fee-for-service programs. The stock makes up 9.8% of the assets in the DIA portfolio.
UnitedHealth has gained 13.7% in the same time frame. The expected earnings growth rate for the next year is 11.78%. It has a Zacks Rank #3 and a Growth Score of A.
Intel, the world’s largest semiconductor company and primary supplier of microprocessors and chipsets, is gradually reducing its dependence on the PC-centric business by moving into data-centric businesses — such as AI and autonomous driving. INTC is up 13.3% over the past three months and accounts for 0.8% in the fund’s basket (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
Intel is expected to see earnings growth of 98.5% for 2024 and has a Zacks Rank #1.
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5 Stocks Powering Dow ETF's 3-Month Outperformance
Amid the ongoing broad market rally driven by the anticipation that the Fed is nearing the end of its interest rate hike cycle, the Dow Jones Industrial Average is catching up pretty well, hitting its highest levels since January last year. The blue-chip index has been outperforming over the past three months, rising 5.8% compared with a 3.9% increase for the broad market index, S&P 500.
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, also gained 5.8% in the same timeframe. While most of the stocks in the ETF portfolio made a strong comeback in recent months, we have highlighted five that have been leading the way higher. These include NIKE Inc. (NKE - Free Report) , Boeing (BA - Free Report) , Salesforce Inc. (CRM - Free Report) , UnitedHealth Group Inc. (UNH - Free Report) and Intel Corporation (INTC - Free Report) .
Being cyclical in nature, the blue-chip index outperforms when economic growth improves. Americans are now feeling more confident about the economy than they did over the past few months. This is especially true as consumer sentiment, as indicated by the preliminary reading on the University of Michigan preliminary index, rebounded sharply in early December and broke the streak of four consecutive months of decline (read: ETFs Set to Gain Amid Robust Holiday Consumer Sentiment).
Inflation is also slowing, which will eventually lead to potential cuts in short-term interest rates by the Fed, leading to more growth. Notably, inflation edged down for the second consecutive month in November, driven by a drop in energy prices.
The outperformance came as the rally broadened out in recent weeks after the astounding surge of the “Magnificent Seven” stocks. Cyclical stocks, bank stocks and small-cap stocks have all shown an upward trend, indicating that the market is in a state of expansion, supporting the uptrend in equities (read: Magnificent Seven ETFs: A Review of 2023 & What Lies Ahead).
According to Bespoke, the Dow Jones has notched an all-time high on a total return basis, which includes dividend payments. The index is up 12% this year on a total return basis.
DIA in Focus
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with AUM of $31.3 billion and an average daily volume of 3.6 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket with each making up for less than 10% share. Financials (20.3%), healthcare (19.6%), information technology (19.5%), industrials (14.6%) and consumer discretionary (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 outlook.
Best-Performing Stocks of DIA
NIKE Inc. is engaged in the business of designing, developing and marketing of athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. It has gained more than 24% over the past three months and accounts for 2.1% in the fund’s basket.
NIKE is expected to see an earnings growth of 15.79% for the fiscal year (ending May 2024) and has a Zacks Rank #2 (Buy).
Boeing has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft along with varied defense products position it as one of the largest defense contractors in the United States. It has a solid estimated earnings growth of 159.5% for 2024.
Boeing has risen 18% in the past three months and accounts for 4.5% of DIA. The stock has a Zacks Rank #3 (Hold) and a Growth Score of A.
Salesforce is the leading provider of on-demand Customer Relationship Management 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. The stock has risen 15.7% in the past three months and accounts for 4.5% in the fund’s basket.
Salesforce has an expected earnings growth rate of 16% for the fiscal year (ending January 2025). It has a Zacks Rank #3 and a Growth Score of B.
UnitedHealth provides a wide range of healthcare products and services, such as health maintenance organizations, point-of-service plans, preferred provider organizations and managed fee-for-service programs. The stock makes up 9.8% of the assets in the DIA portfolio.
UnitedHealth has gained 13.7% in the same time frame. The expected earnings growth rate for the next year is 11.78%. It has a Zacks Rank #3 and a Growth Score of A.
Intel, the world’s largest semiconductor company and primary supplier of microprocessors and chipsets, is gradually reducing its dependence on the PC-centric business by moving into data-centric businesses — such as AI and autonomous driving. INTC is up 13.3% over the past three months and accounts for 0.8% in the fund’s basket (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
Intel is expected to see earnings growth of 98.5% for 2024 and has a Zacks Rank #1.