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On Monday, U.S. stocks soared as news of an unsuccessful assassination attempt on presidential candidate Donald Trump bolstered investor confidence in his electoral prospects. SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) inched up 0.5%, closing above the historic 40,000 mark. The SPDR S&P 500 ETF Trust (SPY - Free Report) and Invesco QQQ Trust (QQQ - Free Report) each saw gains of 0.3%, approaching record highs.
Strong Bank Earnings Drive Market Optimism
The market rally was buoyed by robust second-quarter earnings reports from major U.S. banks. Goldman Sachs (GS - Free Report) reported a 150% surge in profits, thanks to strong performance in investment banking. BlackRock (BLK - Free Report) topped profit estimates as its assets under management reached a record $10.6 trillion. The financials sector makes up about 23% of the Dow Jones and Goldman Sachs accounts for about 7.88% of the fund.
Market Reaction to Political Turbulence
Investor focus changed on likely outcomes following the assassination attempt on Trump, with some anticipating his victory in the upcoming presidential election. Market expectations favor Trump-oriented policies such as tax cuts, higher trade tariffs, and regulatory easing under a Republican administration. The Dow Jones Industrial Average was one of the strongest beneficiaries of the first year of the previous Trump era (read: ETF Winners of the First Year of Trump Era).
Yield Curve and Economic Indicators
The benchmark 10-year Treasury yield rose to 4.23%, up 5 bps from Jul 12, 2024. The 30-year yield saw an uptick of 6 bps from Jul 12. Overall, the yield curve steepened. The dollar ETF Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) gained ground 0.2% on Jul 15, and bitcoin soared to a two-week high amid speculation surrounding Trump's electoral prospects.
Fed to Cut Rates in September?
Federal Reserve Chair Jerome Powell's remarks at a Washington, D.C., event reiterated progress in tackling inflation based on recent data that shows signs of cooling in inflation. His statements pointed to potential rate cuts as early as September, boosting Wall Street.
Cheaper Valuation of Dow Jones
The Dow Jones has a forward twelve-month P/E of 19.46X, down from S&P 500’s forward P/E of 22.72X, Nasdaq 100’s forward P/E of 29.64X and the Russell 2000’s P/E of 26.98X, per Wall Street Journal. This indicates that the Dow Jones has a cheaper valuation and has a reason to rally if the Fed cuts rates.
ETFs in Focus
Investors seeking to participate in the Dow Jones rally can consider SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , iShares Dow Jones U.S. ETF (IYY - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) , ProShares Ultra Dow30ETF (DDM - Free Report) and ProShares UltraPro Dow30 (UDOW - Free Report) .
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Dow Jone ETFs at an All-Time High: Here's Why
On Monday, U.S. stocks soared as news of an unsuccessful assassination attempt on presidential candidate Donald Trump bolstered investor confidence in his electoral prospects. SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) inched up 0.5%, closing above the historic 40,000 mark. The SPDR S&P 500 ETF Trust (SPY - Free Report) and Invesco QQQ Trust (QQQ - Free Report) each saw gains of 0.3%, approaching record highs.
Strong Bank Earnings Drive Market Optimism
The market rally was buoyed by robust second-quarter earnings reports from major U.S. banks. Goldman Sachs (GS - Free Report) reported a 150% surge in profits, thanks to strong performance in investment banking. BlackRock (BLK - Free Report) topped profit estimates as its assets under management reached a record $10.6 trillion. The financials sector makes up about 23% of the Dow Jones and Goldman Sachs accounts for about 7.88% of the fund.
Market Reaction to Political Turbulence
Investor focus changed on likely outcomes following the assassination attempt on Trump, with some anticipating his victory in the upcoming presidential election. Market expectations favor Trump-oriented policies such as tax cuts, higher trade tariffs, and regulatory easing under a Republican administration. The Dow Jones Industrial Average was one of the strongest beneficiaries of the first year of the previous Trump era (read: ETF Winners of the First Year of Trump Era).
Yield Curve and Economic Indicators
The benchmark 10-year Treasury yield rose to 4.23%, up 5 bps from Jul 12, 2024. The 30-year yield saw an uptick of 6 bps from Jul 12. Overall, the yield curve steepened. The dollar ETF Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) gained ground 0.2% on Jul 15, and bitcoin soared to a two-week high amid speculation surrounding Trump's electoral prospects.
Fed to Cut Rates in September?
Federal Reserve Chair Jerome Powell's remarks at a Washington, D.C., event reiterated progress in tackling inflation based on recent data that shows signs of cooling in inflation. His statements pointed to potential rate cuts as early as September, boosting Wall Street.
Cheaper Valuation of Dow Jones
The Dow Jones has a forward twelve-month P/E of 19.46X, down from S&P 500’s forward P/E of 22.72X, Nasdaq 100’s forward P/E of 29.64X and the Russell 2000’s P/E of 26.98X, per Wall Street Journal. This indicates that the Dow Jones has a cheaper valuation and has a reason to rally if the Fed cuts rates.
ETFs in Focus
Investors seeking to participate in the Dow Jones rally can consider SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , iShares Dow Jones U.S. ETF (IYY - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) , ProShares Ultra Dow30 ETF (DDM - Free Report) and ProShares UltraPro Dow30 (UDOW - Free Report) .