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The Dow Jones Industrial Average hit a new record high on increased September rate cut bets. The blue-chip index gained about 1% over the past week, outperforming the other indices. The S&P 500 gained 0.3% while the Nasdaq Composite Index shed 0.5% in the same time frame.
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) .
The solid trend is likely to continue in the coming months. Federal Reserve Chair Jerome Powell signaled that interest rate cuts are coming in September, citing inflation is easing and the job market is weakening. At the Fed’s annual symposium in Jackson Hole, Powell said, “the time has come” to lower borrowing costs in the light of a diminishing upside risk to inflation and moderating labor demand.” “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” The probability of a 25-bps rate cut stands at 69.5%, while that of a 50-bps cut is at 30.5%, according to the latest CME Group's FedWatch tool (read: 5 Sector ETFs Scaling New Highs on Fed Minutes).
Lower rates primarily benefit cyclical sectors like industrials, financials and consumer discretionary. Being highly exposed to cyclical sectors, the blue-chip index is set to outperform from this trend. Lower rates generally lead to reduced borrowing costs for mortgages, credit cards and other consumer and business loans. This helps businesses to expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and boosts the stock market.
Additionally, fading AI trades are taking a toll on the most loving technology sector, benefiting the undervalued cyclical sectors.
5 Dow ETFs to Bet On Following the Outperformance
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with an AUM of $34.8 billion and an average daily volume of 3 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each having less than a 9.3% share. Financials (23.4%), healthcare (19%), information technology (18.7%), consumer discretionary (14.8%) and industrials (13.7%) 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: Dow Jone ETFs at an All-Time High: Here's Why).
iShares Dow Jones U.S. ETF tracks the Dow Jones U.S. Index, holding 1075 stocks in its basket, with none accounting for more than 6.3% of the assets. Information technology takes the largest share at 30.5%, while financials, healthcare and consumer discretionary round off the next spots with double-digit exposure each.
iShares Dow Jones U.S. ETF has amassed $2 million in its asset base while trading in an average daily volume of 24,000 shares. It charges 20 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 29 stocks in its basket, with none accounting for more than 12.2% of the assets.
Invesco Dow Jones Industrial Average Dividend ETF has been able to manage assets worth $305.1 million while trading in a volume of 20,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
Leveraged Play: A Short-Term Win
Investors willing to take an extra risk could go for leveraged ETFs. These funds create a leveraged (2X or 3X) long position in the underlying index through the use of swaps, options, future contracts and other financial instruments. While these funds provide outsized returns in a short span, they could lead to huge losses compared to traditional funds in fluctuating or seesaw markets.
ProShares Ultra Dow30 ETF provides twice (2X) the return of the Dow Jones Industrial Average. It has AUM of $400.8 million and trades in a good volume of around 270,000 shares on average. The product charges 95 bps in annual fees (see: all the Leveraged Equity ETFs here).
ProShares UltraPro Dow30 also tracks the Dow Jones Industrial Average, offering three times (3X) exposure to the index. It has amassed $610.8 million in its asset base and trades in a solid average daily volume of 4 million shares. The expense ratio comes in at 0.95%.
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Dow Jones Outperforms: 5 ETFs That You Can Bet On
The Dow Jones Industrial Average hit a new record high on increased September rate cut bets. The blue-chip index gained about 1% over the past week, outperforming the other indices. The S&P 500 gained 0.3% while the Nasdaq Composite Index shed 0.5% in the same time frame.
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) .
The solid trend is likely to continue in the coming months. Federal Reserve Chair Jerome Powell signaled that interest rate cuts are coming in September, citing inflation is easing and the job market is weakening. At the Fed’s annual symposium in Jackson Hole, Powell said, “the time has come” to lower borrowing costs in the light of a diminishing upside risk to inflation and moderating labor demand.” “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” The probability of a 25-bps rate cut stands at 69.5%, while that of a 50-bps cut is at 30.5%, according to the latest CME Group's FedWatch tool (read: 5 Sector ETFs Scaling New Highs on Fed Minutes).
Lower rates primarily benefit cyclical sectors like industrials, financials and consumer discretionary. Being highly exposed to cyclical sectors, the blue-chip index is set to outperform from this trend. Lower rates generally lead to reduced borrowing costs for mortgages, credit cards and other consumer and business loans. This helps businesses to expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and boosts the stock market.
Additionally, fading AI trades are taking a toll on the most loving technology sector, benefiting the undervalued cyclical sectors.
5 Dow ETFs to Bet On Following the Outperformance
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with an AUM of $34.8 billion and an average daily volume of 3 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each having less than a 9.3% share. Financials (23.4%), healthcare (19%), information technology (18.7%), consumer discretionary (14.8%) and industrials (13.7%) 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: Dow Jone ETFs at an All-Time High: Here's Why).
iShares Dow Jones U.S. ETF (IYY - Free Report)
iShares Dow Jones U.S. ETF tracks the Dow Jones U.S. Index, holding 1075 stocks in its basket, with none accounting for more than 6.3% of the assets. Information technology takes the largest share at 30.5%, while financials, healthcare and consumer discretionary round off the next spots with double-digit exposure each.
iShares Dow Jones U.S. ETF has amassed $2 million in its asset base while trading in an average daily volume of 24,000 shares. It charges 20 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 29 stocks in its basket, with none accounting for more than 12.2% of the assets.
Invesco Dow Jones Industrial Average Dividend ETF has been able to manage assets worth $305.1 million while trading in a volume of 20,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
Leveraged Play: A Short-Term Win
Investors willing to take an extra risk could go for leveraged ETFs. These funds create a leveraged (2X or 3X) long position in the underlying index through the use of swaps, options, future contracts and other financial instruments. While these funds provide outsized returns in a short span, they could lead to huge losses compared to traditional funds in fluctuating or seesaw markets.
ProShares Ultra Dow30 ETF (DDM - Free Report)
ProShares Ultra Dow30 ETF provides twice (2X) the return of the Dow Jones Industrial Average. It has AUM of $400.8 million and trades in a good volume of around 270,000 shares on average. The product charges 95 bps in annual fees (see: all the Leveraged Equity ETFs here).
ProShares UltraPro Dow30 (UDOW - Free Report)
ProShares UltraPro Dow30 also tracks the Dow Jones Industrial Average, offering three times (3X) exposure to the index. It has amassed $610.8 million in its asset base and trades in a solid average daily volume of 4 million shares. The expense ratio comes in at 0.95%.