Amid the broad market rally, the S&P 500 and Nasdaq Composite Index are hitting new record highs, and the Dow Jones Industrial Index ended above 28,000 for the first time in six months. However, the benchmark is still far 4.2% away from its peak reached on Feb 12 (read: S&P 500 Hits New Record Highs: Top-Ranked ETF Winners).
The latest rally came on the back of new developments in the coronavirus vaccine. The Food and Drug Administration approved the use of convalescent plasma — the antibody-rich component of blood taken from recovered COVID-19 patients — as a treatment for serious coronavirus cases. Meanwhile, the Trump administration is seeking emergency use authorization of an experimental vaccine being developed by AstraZeneca AZN and Oxford University ahead of the Nov 3 presidential election, according to the Financial Times.
Adding to the market’s strength is the back-to-school season, which is different this year with school outfits being replaced by technology gadgets. Further, the combination of unprecedented fiscal and monetary stimulus in response to the pandemic, hopes of a swift economic rebound and better-than-expected earnings have driven the stocks higher. The rise in mergers and acquisitions and a weak dollar have also acted as a tailwind.
The recent dollar weakness is a huge driver for the mega-cap companies, which derive most of their revenues from international markets. This is because a weak dollar has made dollar-denominated assets cheap for foreign investors, making U.S. multinationals more competitive and leading to increased profits (read: 4 ETF Zones Making the Most of a Weakening Dollar).
Apart from these, a statement released by the U.S. Trade Representative bolstered optimism. Per the statement, both the United States and China are in discussion for the implementation of the historic Phase One Agreement and are committed to take the steps necessary to ensure its success.
Given this, SPDR Dow Jones Industrial Average ETF DIA tracking the Dow Jones Index, has gained 6.7% in a month. Let’s take a closer look at the fundamentals of DIA and its performance.
DIA in Focus
This is one of the largest and most-popular ETFs in the large-cap space with AUM of $23.1 billion and average daily volume of 3 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 12.2% share. Information technology (27.7%), consumer discretionary (14.8%), healthcare (14.5%), industrials (13%) and financials (12.5%) and are the top five sectors. DIA charges 16 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 Tech ETFs at the Forefront of the Latest Sector Rally).
Though most stocks in the fund’s portfolio gained over the past month, we have highlighted the five stocks in the ETF that led the way higher with their respective positions in the fund’s basket:
Apple Inc. AAPL: The stock has rallied about 32.8% in a month. It saw positive earnings estimate revision of 57 cents over the past 30 days for the fiscal year (ending September 2020) with an estimated growth rate of 8.7%. Apple currently has a Zacks Rank #1 (Strong Buy) and falls under a top-ranked Zacks industry (top 9%). It takes the top spot in DIA with 12.2% share (read: 5 Top-Ranked ETFs to Taste Apple’s $2 Trillion Market Cap).
NIKE Inc. NKE: The stock has gained 15.1% in a month and makes up for 2.7% share in DIA. It has a Zacks Rank #3. The company has seen negative earnings estimate revision of 3 cents for the fiscal year (ending May 2021) over the past month and has an expected earnings growth rate of 43.7%. The stock is part of a bottom-ranked Zacks industry (bottom 12%).
The Walt Disney Company DIS: This stock takes 3.1% allocation in the fund’s basket and has climbed 12.4% in a month. The stock saw solid earnings estimate revision of 45 cents for the fiscal year (ending September 2020) over the past month and has estimated year-over-year earnings decline of 68.3%. Disney belongs to a bottom-ranked Zacks industry (bottom 9%). It has a Zacks Rank #3.
The Procter Gamble Company PG: The stock has gained 9.7% over the past month. It has seen positive earnings estimate revision of 17 cents in a month for the fiscal year (ending June 2021) and has an estimated earnings growth rate of 5.5%. The stock belongs to a top-ranked Zacks industry (top 37%) and takes the 12th spot in DIA portfolio with 3.4% exposure. Procter Gamble currently has a Zacks Rank #3.
Merck Co. Inc. MRK: This stock makes up for 2.1% allocation and has gained 8.2% in a month. The stock has witnessed positive earnings estimate revision of 38 cents for this year over the past month and has estimated year-over-year earnings growth of 10%. Merck belongs to a top-ranked Zacks industry (top 48%) and has a Zacks Rank #3.
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NIKE, Inc. (NKE): Free Stock Analysis Report
AstraZeneca PLC (AZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Merck Co., Inc. (MRK): Free Stock Analysis Report
The Walt Disney Company (DIS): Free Stock Analysis Report
Procter Gamble Company The (PG): Free Stock Analysis Report
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.