Global stocks staged a monster rally on Mar 24 owing to the bleak signs of slowing coronavirus spread in Italy, – one of the most severely affected countries, and $2-trillion worth U.S. coronavirus stimulus bill. Asia stocks witnessed its best-day since 2008.
The S&P 500-based ETF (SPY - Free Report) (up 8.5%), the Dow-Jones-based ETF (DIA - Free Report) (up 11.0%) and the Nasdaq 100-based ETF (QQQ - Free Report) (up 7.7%) registered massive gains on the day. Dow Jones Industrial Average (up about 11.4%) recorded the best single-day gain since 1933. There was some good news from the industrial sector lately, which probably fueled the Dow rally.
Also, Crude oil prices too bounced back on hopes that the flood of monetary a fiscal stimulus may slower the downturn in the economy. Crude gained about 3% on Mar 24 with United States Oil Fund, LP (USO - Free Report) adding around 2%.
What Aided Dow Jones
The index suffered a lot (more than the S&P 500 and the Nasdaq) previously due to downtrend displayed by one of its key holdings, Boeing (BA - Free Report) , as well as global recessionary fears amid coronavirus outbreak. The index is manufacturing-and-trade-dependent. So, any susceptibility to global growth hurts it more and makes its valuation cheaper.
Furthermore, it has been noticed that the Dow Jones shares a deep relationship with oil price movement. Though the energy sector rally spread optimism in the broader market as a whole on Mar 24, in most cases, on a particular day of oil price surge, the spurt in the Dow Jones is steeper than that of the S&P 500 or vice versa.
The Dow Jones assigns greater weight to higher-priced stocks, which is one of the reasons behind the recent rally. Amid the ongoing coronavirus-led crisis, blue chip stocks are better-positioned as these can endure the financial turmoil more smoothly than pint-sized stocks. Moreover, cheap funding (courtesy of a super-dovish Fed) will play its role in aiding the manufacturing sector.
Below we highlight the best-performing stocks of the Dow Jones ETF DIA on Mar 24 (read: All-Out Fed Support: Buy Highly-Rated Corporate Bond ETFs).
Chevron Corporation (CVX - Free Report) — Up 22.7% on Mar 24
Shares of this energy biggie gained on its decision to hang on to its dividend despite the suspension of buyback and capital spending, per a barrons.com article. CVX holds about 2% of DIA.
American Express Company (AXP - Free Report) — Up 21.9% on Mar 24
The diversified financial services company offering charge and credit payment card products was the second highest stock gainer on Mar 24. The “9% of revenue that annual card fees contribute to the total make up a static payment that won't be affected by a few months of economic fallout due to the COVID-19 coronavirus outbreak,” per a fool.com article. The stock holds 2.5% of the fund.
The Boeing Company — Up 20.9% on Mar 24
Per an article published on Reuters, Boeing plans to restart 737 MAX production by May, ceasing the prolonged halt after its MAX jet fleet suffered deadly crashes. The news lifted investors’ sentiments. The fund has 3.8% exposure to Boeing.
McDonald's Corporation (MCD - Free Report) — 18.1% on Mar 24
McDonald’s appears to be a quality pick. Jefferies analyst Andrew Barish sees McDonald’s as the “most defensive restaurant ... should the consumer falter[,] given its value, convenience and marketing advantages,” as quoted on MarketWatch. The analyst believes, the company may register “high single-digit” earnings growth per share in 2020. The stock takes 4.99% of the fund DIA.
United Technologies Corporation — 15.8% on Mar 24
The company’s operations are primarily classified into two principal businesses: Commercial and Aerospace. The stock holds 2.7% of the fund DIA.
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