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Dow Touches New High: 5 Stocks Powering Its ETF This Year
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The Dow Jones Industrial Average hit a fresh high buoyed by expectations of rate cuts this week. The Fed is expected to deliver the first interest rate cut since 2020 in its meeting, scheduled to start today. Markets are pricing in a 50% chance of a 50-bps rate cut and 50% odds of a 25-bps rate cut, according to CME Group's FedWatch tool (read: 5 ETF Zones Set to Benefit When Fed Initiates Rate Cuts).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, has gained 10.4% this year. While most of the stocks in the ETF portfolio have been rising, we have highlighted five that have been leading the way higher. These are Walmart Inc. (WMT - Free Report) , 3M Company (MMM - Free Report) , American Express Company (AXP - Free Report) , International Business Machines Corporation (IBM - Free Report) and The Travelers Companies Inc. (TRV - Free Report) .
With declining inflation, a cooling labor market and a growing economy, policymakers view the current conditions as suitable for a rate cut. Markets have almost fully priced in expectations of 100 bps of Fed rate cuts by the end of 2024, with nearly 60% odds of 125 bps in cuts.
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 (read: 5 ETF Zones Set to Benefit When Fed Initiates Rate Cuts).
DIA in Focus
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with an AUM of $34.2 billion and an average daily volume of 3.3 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket, with each making up for less than 9.4% share. Financials (23.4%), healthcare (19.2%), information technology (18.9%), consumer discretionary (15%) and industrials (13.3%) 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 outlook.
Best-Performing Stocks of DIA
Walmart has evolved from being just a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The stock has risen 53.3% this year. Walmart has an expected earnings growth rate of 9.9% for the fiscal year ending January 2025 and has a Zacks Rank #3 (Hold).
3M Company has manufacturing operations across the globe and serves a diversified customer base throughout the world. The stock saw a solid earnings estimate revision of a couple of cents over the past 30 days for this year. MMM is up 47.8% this year and has a Zacks Rank #3.
American Express is a diversified financial services company offering charge and credit payment card products and travel-related services worldwide. Shares of AXP have risen 39.4% this year. American Express earnings are expected to grow 17% this year. The stock has a Zacks Rank #3.
International Business has gradually evolved as a provider of cloud and data platforms. It has jumped 32.8% this year and is expected to see earnings growth of 5% for this year, IBM has a Zacks Rank #3.
Travelers is principally engaged in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and select international markets. The stock has gained 27.2% this year. Travelers has an expected earnings growth rate of 30.9% for this year and has a Zacks Rank #3.
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Dow Touches New High: 5 Stocks Powering Its ETF This Year
The Dow Jones Industrial Average hit a fresh high buoyed by expectations of rate cuts this week. The Fed is expected to deliver the first interest rate cut since 2020 in its meeting, scheduled to start today. Markets are pricing in a 50% chance of a 50-bps rate cut and 50% odds of a 25-bps rate cut, according to CME Group's FedWatch tool (read: 5 ETF Zones Set to Benefit When Fed Initiates Rate Cuts).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , which tracks the Dow Jones Index, has gained 10.4% this year. While most of the stocks in the ETF portfolio have been rising, we have highlighted five that have been leading the way higher. These are Walmart Inc. (WMT - Free Report) , 3M Company (MMM - Free Report) , American Express Company (AXP - Free Report) , International Business Machines Corporation (IBM - Free Report) and The Travelers Companies Inc. (TRV - Free Report) .
With declining inflation, a cooling labor market and a growing economy, policymakers view the current conditions as suitable for a rate cut. Markets have almost fully priced in expectations of 100 bps of Fed rate cuts by the end of 2024, with nearly 60% odds of 125 bps in cuts.
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 (read: 5 ETF Zones Set to Benefit When Fed Initiates Rate Cuts).
DIA in Focus
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with an AUM of $34.2 billion and an average daily volume of 3.3 million shares. It tracks the Dow Jones Industrial Average Index, holding 30 stocks in its basket, with each making up for less than 9.4% share. Financials (23.4%), healthcare (19.2%), information technology (18.9%), consumer discretionary (15%) and industrials (13.3%) 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 outlook.
Best-Performing Stocks of DIA
Walmart has evolved from being just a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The stock has risen 53.3% this year. Walmart has an expected earnings growth rate of 9.9% for the fiscal year ending January 2025 and has a Zacks Rank #3 (Hold).
3M Company has manufacturing operations across the globe and serves a diversified customer base throughout the world. The stock saw a solid earnings estimate revision of a couple of cents over the past 30 days for this year. MMM is up 47.8% this year and has a Zacks Rank #3.
American Express is a diversified financial services company offering charge and credit payment card products and travel-related services worldwide. Shares of AXP have risen 39.4% this year. American Express earnings are expected to grow 17% this year. The stock has a Zacks Rank #3.
International Business has gradually evolved as a provider of cloud and data platforms. It has jumped 32.8% this year and is expected to see earnings growth of 5% for this year, IBM has a Zacks Rank #3.
Travelers is principally engaged in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and select international markets. The stock has gained 27.2% this year. Travelers has an expected earnings growth rate of 30.9% for this year and has a Zacks Rank #3.