ETFs
5 Stocks Powering the Dow ETF Year-To-Date
The Dow Jones Industrial Average broke the 40,000 mark for the first time on strong corporate earnings and new bets on rate cuts. SPDR Dow Jones Industrial Average ETF DIA, which tracks the Dow, has gained 6.4% so far this year. While most stocks in the ETF portfolio have risen this year, we’ve highlighted five that have led the way higher. These are American Express Company AXP, Walmart Inc. WMT, Amazon.com Inc. AMZN, The Goldman Sachs Group Inc. GS and Merck & Cie Inc. MRK.
The blue-chip index has outperformed in recent months as the stock market rally broadens beyond the technology sector. Cyclical stocks, banks and small-cap stocks have all trended higher in recent weeks, fueling the blue-chip index. Higher earnings and stronger forecasts from many large-cap stocks also propelled the index (read: ETFs will bet on the Dow’s longest winning streak in 2024).
The reconstruction of the star stocks index is also bearing fruit. Amazon, which joined the index on February 26, gave the index a boost after reporting blockbuster results for the first quarter of 2024. The e-commerce giant beat earnings and revenue estimates thanks to to the growth of its AI-powered advertising and cloud computing units.
Inflation in the United States slowed for the first time in six months, sparking new bets on a Fed rate cut as early as September. Low rates are good for stocks because they reduce the cost of borrowing, often necessary to finance business expansion. Lower rates generally reduce the attractiveness of fixed-income investments like bonds, prompting investors to seek higher returns in stock markets. According to the CME FedWatch tool, about 70% of traders now expect at least one cut by the September meeting, a notable increase from a week ago.
DIA in brief
The SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with $33.3 billion in assets under management and $3.7 million in average daily volume. of actions. It tracks the Dow Jones Industrial Average, holding 30 stocks in its basket, each representing less than 8.6% of the shares. The financial (23.2%), information technology (18.8%), healthcare (18.5%), consumer discretionary (14.7%) and industrial sectors (13.9%) are the five main sectors (read: ETFs to make the most of sector rotation).
The SPDR Dow Jones Industrial Average ETF charges 16 basis points in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium Risk Outlook.
DIA’s Top Performing Stocks
American Express is a diversified financial services company offering payment and credit card products and travel-related services worldwide. AXP shares are up 28.8% so far this year. American Express’s profits are expected to grow 15% this year. It represents 3.97% of DIA’s portfolio. He has a Zacks Rank of 3 (Hold).
Walmart has evolved from just a traditional brick-and-mortar retailer to an omnichannel player. It operates retail, wholesale and other units worldwide. The stock is up 21.8% this year. Walmart has an expected earnings growth rate of 4.3% for this year and has a Zacks Rank #3.
Amazon is one of the largest e-commerce providers. It has jumped nearly 21% this year and represents 3% in the fund’s basket. AMZN is expected to see earnings growth of 56.5% for this year and represents 3% of DIA’s portfolio. The stock has a Zacks Rank #3.
Golden Man is a leading financial holding company providing BI, securities, investment management and consumer banking services to a diverse client base. The stock has gained more than 20% so far this year and its earnings growth rate is estimated at 60.5% for this year. Goldman represents a 7.6% stake in DIA’s portfolio and has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Merck operates as a global healthcare company. It has gained more than 20% since the start of the year and represents 2.1% of the fund’s basket. Merck is expected to experience 474.2% earnings growth for this year and has a Zacks Rank #3.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
Walmart Inc. (WMT): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
ETF SPDR Dow Jones Industrial Average (DIA): ETF Research Reports