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Dow ETF Surges on Index's Best Day This Year: 5 Top Stocks
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The Dow Jones Industrial Average, which missed the rally this year, has finally started to catch up as investors are flocking to the undervalued segments of the market amid growing expectations of a Fed rate cut this year. The blue-chip index hit a new all-time high, notching its best one-day gain since June 2023, after reclaiming the 40,000 milestone for the first time since May. In fact, the Dow Jones has gained more than 4% over the past week (read: Dow Reclaims 40,000 Mark, Surpasses Major Indices: ETFs to Tap).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, gained 1.8% on Jul 16. While most of the stocks in the ETF portfolio have risen, we have highlighted five that led the way higher on the day. These are UnitedHealth Group (UNH - Free Report) , Caterpillar (CAT - Free Report) , Boeing (BA - Free Report) , The Home Depot Inc. (HD - Free Report) and Dow Inc. (DOW - Free Report) .
The rally is now broadening beyond the technology sector as a rate cut will benefit the companies with higher financing costs. Cyclical stocks, which are heavily reliant on borrowing costs, will get a boost compared to cash-rich, mega-cap technology stocks, which have been riding a wave of optimism around artificial intelligence. According to the CME FedWatch tool, traders now see 100% odds the Fed will lower rates in September.
Additionally, strong earnings have added to the strength. UnitedHealth was the biggest gainer yesterday, driven by better-than-expected second-quarter results. Caterpillar also gained momentum. Banking stocks like Bank of America and Morgan Stanley also saw a spike in their share prices on robust quarterly results.
Further, the Dow Jones is attractively valued at current levels. It 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 blue-chip index has room for growth if the Fed cuts rates.
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 $34.3 billion and an average daily volume of 3 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket, with each making up for less than 8.8% share. Financials (23.3%), information technology (19.4%), healthcare (18.6%), consumer discretionary (14.3%) and industrials (13.9%) are the top five sectors (read: Dow Jone ETFs at an All-Time High: Here's Why).
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Best-Performing Stocks of DIA
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 8.8% of the assets in the DIA portfolio.
UnitedHealth gained 6.5% on Jul 16. It has an expected earnings growth rate of 9.6% for this year. It has a Zacks Rank #4 (Sell) and a Growth Score of A.
Caterpillar, known for its iconic yellow machines, is the largest global construction and mining equipment manufacturer. The stock rose 4.3% in the last trading session and accounts for 5.8% in the fund’s basket.
Boeing has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft and its varied defense products position it as one of the largest defense contractors in the United States. It has a solid estimated earnings growth of 69.9% for this year.
Boeing has risen 3.9% in the latest trading session and accounts for 3% of DIA. The stock has a Zacks Rank #4.
The Home Depot is the world’s largest home improvement specialty retailer. It offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products and related services. The stock accounts for 5.9% of the assets in the fund’s basket and gained about 3% on Jul 16.
Home Depot has an estimated earnings growth of 1.1% for the fiscal year ending January 2025. It has a Zacks Rank #3 and a Growth Score of A.
Dow Inc. is a material science company providing a world-class portfolio of advanced, sustainable and leading-edge products. The stock makes up 0.9% of the assets in the DIA portfolio.
Dow Inc. gained 2.7% on the day and has an expected earnings growth of 31.2% for this year. It has a Zacks Rank #4 and a Growth Score of B.
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Dow ETF Surges on Index's Best Day This Year: 5 Top Stocks
The Dow Jones Industrial Average, which missed the rally this year, has finally started to catch up as investors are flocking to the undervalued segments of the market amid growing expectations of a Fed rate cut this year. The blue-chip index hit a new all-time high, notching its best one-day gain since June 2023, after reclaiming the 40,000 milestone for the first time since May. In fact, the Dow Jones has gained more than 4% over the past week (read: Dow Reclaims 40,000 Mark, Surpasses Major Indices: ETFs to Tap).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, gained 1.8% on Jul 16. While most of the stocks in the ETF portfolio have risen, we have highlighted five that led the way higher on the day. These are UnitedHealth Group (UNH - Free Report) , Caterpillar (CAT - Free Report) , Boeing (BA - Free Report) , The Home Depot Inc. (HD - Free Report) and Dow Inc. (DOW - Free Report) .
The rally is now broadening beyond the technology sector as a rate cut will benefit the companies with higher financing costs. Cyclical stocks, which are heavily reliant on borrowing costs, will get a boost compared to cash-rich, mega-cap technology stocks, which have been riding a wave of optimism around artificial intelligence. According to the CME FedWatch tool, traders now see 100% odds the Fed will lower rates in September.
Additionally, strong earnings have added to the strength. UnitedHealth was the biggest gainer yesterday, driven by better-than-expected second-quarter results. Caterpillar also gained momentum. Banking stocks like Bank of America and Morgan Stanley also saw a spike in their share prices on robust quarterly results.
Further, the Dow Jones is attractively valued at current levels. It 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 blue-chip index has room for growth if the Fed cuts rates.
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 $34.3 billion and an average daily volume of 3 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket, with each making up for less than 8.8% share. Financials (23.3%), information technology (19.4%), healthcare (18.6%), consumer discretionary (14.3%) and industrials (13.9%) are the top five sectors (read: Dow Jone ETFs at an All-Time High: Here's Why).
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Best-Performing Stocks of DIA
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 8.8% of the assets in the DIA portfolio.
UnitedHealth gained 6.5% on Jul 16. It has an expected earnings growth rate of 9.6% for this year. It has a Zacks Rank #4 (Sell) and a Growth Score of A.
Caterpillar, known for its iconic yellow machines, is the largest global construction and mining equipment manufacturer. The stock rose 4.3% in the last trading session and accounts for 5.8% in the fund’s basket.
Caterpillar has an expected earnings growth rate of 2.4% for this year and has a Zacks Rank #3 (Hold). It has a Growth Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Boeing has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft and its varied defense products position it as one of the largest defense contractors in the United States. It has a solid estimated earnings growth of 69.9% for this year.
Boeing has risen 3.9% in the latest trading session and accounts for 3% of DIA. The stock has a Zacks Rank #4.
The Home Depot is the world’s largest home improvement specialty retailer. It offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products and related services. The stock accounts for 5.9% of the assets in the fund’s basket and gained about 3% on Jul 16.
Home Depot has an estimated earnings growth of 1.1% for the fiscal year ending January 2025. It has a Zacks Rank #3 and a Growth Score of A.
Dow Inc. is a material science company providing a world-class portfolio of advanced, sustainable and leading-edge products. The stock makes up 0.9% of the assets in the DIA portfolio.
Dow Inc. gained 2.7% on the day and has an expected earnings growth of 31.2% for this year. It has a Zacks Rank #4 and a Growth Score of B.