Dow ETF In Focus Ahead Of Q4 Earnings

After logging in double-digit gains in the fourth quarter, the Dow Jones continued its solid run to start the New Year buoyed by the widening reach of COVID-19 vaccines and hopes of more stimulus from a Democratic-led U.S. Congress.

The strength is likely to continue heading into the earnings season. For the fourth quarter, the S&P 500 earnings are expected to decline 10.4% despite 0.3% higher revenues. The earnings projection reflects an improvement from the 13.4% earnings decline expected at the end of the third quarter and follows the 7% earnings drop in Q3.

Given this upside in the earnings trend, SPDR Dow Jones Industrial Average ETF (DIA - Free Report), which tracks the Dow Jones Industrial Average Index, is in the spotlight.

DIA in Focus

This is one of the largest and the most popular ETFs in the large-cap space with AUM of $24.8 billion and an average daily volume of 3.3 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with each holding less than 8% share. Information technology (21.1%), healthcare (17.7%), industrials (16.6%), financials (14.9%) and consumer discretionary (13.4%) are the top five sectors. DIA charges 16 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk. 

Nearly two-tenth of the blue-chip firms are expected to announce results this week and in the next. JPMorgan Chase (JPM - Free Report) is expected to release earnings on Jan 15 while International Business Machines (IBM - Free Report) and Goldman (GS - Free Report) are scheduled to report on Jan 19. UnitedHealth Group (UNH - Free Report) will report on Jan 20.

Let’s delve deeper into the fourth-quarter earnings picture that will likely aid the fund in the coming days.

Earnings Whispers

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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