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The Dow Jones Industrial Average Index has been performing well over the past three months in anticipation of a shift in monetary policy. Though the blue-chip index is struggling to find a footing in recent sessions, it is outperforming the other benchmarks. This indicates that the laggard of the last year has been emerging as a winner at the start of 2024.
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, gained 14% in the last three months but shed 0.6% in the initial days of this year (read: Will Dow Jones ETFs Rule in 2024?).
The fourth-quarter 2023 earnings season is set to begin this week, with the banking sector gearing up to report numbers. There has been a deceleration in the earnings outlook in recent months, with negative revisions for several key sectors since the start of the fourth quarter.
Total S&P 500 earnings are expected to be down 0.2% from the same period last year despite 2.3% higher revenues, per the latest Earnings Trends. This would follow 3.8% earnings growth in the third quarter on 2% higher revenues. Estimates have steadily come down from 5.5% growth projected in early October, representing a significant decline in earnings estimates compared to the first three quarters of 2023. The negative revisions are more pronounced in 11 of the 16 Zacks sectors.
Of the 16 Zacks sectors, eight are expected to post earnings growth in the fourth quarter, with the strongest gains in the Technology sector (18.8%). This would be followed by retail (18.3%), Consumer Discretionary (14.8%%), Utilities (14.7%) and Finance (4.7%).
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 $32.4 billion and an average daily volume of 4 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with a slight tilt toward the top firm. Financials (21.1%), healthcare (19.7%), information technology (18.9%), industrials (14.6%) and consumer discretionary (13%) 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 (read: 5 Power-Packed ETFs to Buy for 2024).
Nearly one-fourth of the blue-chip firms are expected to announce results this week and the next. JPMorgan Chase (JPM - Free Report) and UnitedHealth (UNH - Free Report) are expected to report on Jan 12, while Goldman (GS - Free Report) will announce earnings on Jan 16. Johnson & Johnson (JNJ - Free Report) is scheduled to report on Jan 23, while International Business Machines (IBM) will report on Jan 24. Dow Inc. (DOW - Free Report) and Intel (INTC - Free Report) are expected to release earnings on Jan 25.
Let’s delve deeper into the probable fourth-quarter earnings picture that will likely aid the fund in the coming days.
JPMorgan has an Earnings ESP of -1.83% and a Zacks Rank #2. The stock has seen a negative earnings estimate revision of 8 cents over the past 30 days for the to-be-reported quarter. JPM delivered an earnings surprise of 16.76%, on average, in the last four quarters.
UnitedHealth has an Earnings ESP of +0.54% and a Zacks Rank #4 (Sell). The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter. It delivered an earnings surprise of 2.74%, on average, over the last four quarters.
Goldman has an Earnings ESP of -5.64% and a Zacks Rank #4. The stock has witnessed a negative earnings estimate revision of 36 cents 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 7.80%.
Johnson & Johnson has an Earnings ESP of -2.86% and a Zacks Rank #3. The stock saw a negative earnings estimate revision of 5 cents over the past 30 days for the to-be-reported quarter. JNJ’s earnings surprise track record over the preceding four quarters is robust, the average being 6.37% (read: Biotech ETFs Stage Solid Comeback at the Start of 2024).
International Business Machines has an Earnings ESP of 2.10% and a Zacks Rank #3. The stock saw a positive earnings estimate revision of a penny in the past seven 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. IBM delivered an earnings surprise of 4.90%, on average, in the last four quarters.
Dow has an Earnings ESP of +3.22% and a Zacks Rank #4. The stock has seen a positive earnings estimate revision of a penny 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 14.06%.
Intel has an Earnings ESP of -0.90% and a Zacks Rank #3. 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 136.31%, 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 Q4 Earnings Push Dow ETF Higher?
The Dow Jones Industrial Average Index has been performing well over the past three months in anticipation of a shift in monetary policy. Though the blue-chip index is struggling to find a footing in recent sessions, it is outperforming the other benchmarks. This indicates that the laggard of the last year has been emerging as a winner at the start of 2024.
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) , which tracks the Dow Jones Industrial Average Index, gained 14% in the last three months but shed 0.6% in the initial days of this year (read: Will Dow Jones ETFs Rule in 2024?).
The fourth-quarter 2023 earnings season is set to begin this week, with the banking sector gearing up to report numbers. There has been a deceleration in the earnings outlook in recent months, with negative revisions for several key sectors since the start of the fourth quarter.
Total S&P 500 earnings are expected to be down 0.2% from the same period last year despite 2.3% higher revenues, per the latest Earnings Trends. This would follow 3.8% earnings growth in the third quarter on 2% higher revenues. Estimates have steadily come down from 5.5% growth projected in early October, representing a significant decline in earnings estimates compared to the first three quarters of 2023. The negative revisions are more pronounced in 11 of the 16 Zacks sectors.
Of the 16 Zacks sectors, eight are expected to post earnings growth in the fourth quarter, with the strongest gains in the Technology sector (18.8%). This would be followed by retail (18.3%), Consumer Discretionary (14.8%%), Utilities (14.7%) and Finance (4.7%).
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 $32.4 billion and an average daily volume of 4 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with a slight tilt toward the top firm. Financials (21.1%), healthcare (19.7%), information technology (18.9%), industrials (14.6%) and consumer discretionary (13%) 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 (read: 5 Power-Packed ETFs to Buy for 2024).
Nearly one-fourth of the blue-chip firms are expected to announce results this week and the next. JPMorgan Chase (JPM - Free Report) and UnitedHealth (UNH - Free Report) are expected to report on Jan 12, while Goldman (GS - Free Report) will announce earnings on Jan 16. Johnson & Johnson (JNJ - Free Report) is scheduled to report on Jan 23, while International Business Machines (IBM) will report on Jan 24. Dow Inc. (DOW - Free Report) and Intel (INTC - Free Report) are expected to release earnings on Jan 25.
Let’s delve deeper into the probable fourth-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 (Strong Buy), 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
JPMorgan has an Earnings ESP of -1.83% and a Zacks Rank #2. The stock has seen a negative earnings estimate revision of 8 cents over the past 30 days for the to-be-reported quarter. JPM delivered an earnings surprise of 16.76%, on average, in the last four quarters.
UnitedHealth has an Earnings ESP of +0.54% and a Zacks Rank #4 (Sell). The stock has witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter. It delivered an earnings surprise of 2.74%, on average, over the last four quarters.
Goldman has an Earnings ESP of -5.64% and a Zacks Rank #4. The stock has witnessed a negative earnings estimate revision of 36 cents 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 7.80%.
Johnson & Johnson has an Earnings ESP of -2.86% and a Zacks Rank #3. The stock saw a negative earnings estimate revision of 5 cents over the past 30 days for the to-be-reported quarter. JNJ’s earnings surprise track record over the preceding four quarters is robust, the average being 6.37% (read: Biotech ETFs Stage Solid Comeback at the Start of 2024).
International Business Machines has an Earnings ESP of 2.10% and a Zacks Rank #3. The stock saw a positive earnings estimate revision of a penny in the past seven 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. IBM delivered an earnings surprise of 4.90%, on average, in the last four quarters.
Dow has an Earnings ESP of +3.22% and a Zacks Rank #4. The stock has seen a positive earnings estimate revision of a penny 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 14.06%.
Intel has an Earnings ESP of -0.90% and a Zacks Rank #3. 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 136.31%, 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.