After a dismal September, Wall Street regained momentum, registering back-to-back weekly gains. Notably, the Dow Jones Industrial Average Index gained 3.3% last week, marking its best weekly performance since Aug 7.

The strength is likely to continue heading into the earnings season. For the third quarter, the S&P 500 earnings are expected to decline 22.3% while revenues will likely dip 2.9%. The earnings projection indicates an improvement from the 26.5% earnings decrease expected at the start of July and follows the 32.4% earnings drop in the second quarter when economic and business activities came to a halt as a result of the pandemic-driven lockdowns.

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 $22.8 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 8% share. Information technology (23.6%), healthcare (18.3%), industrials (15.4%), consumer discretionary (14.8%) and financials (12.2%) 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 one-fourth of the blue-chip firms are expected to announce results this week and in the next. JPMorgan Chase (JPM - Free Report) and Johnson & Johnson (JNJ - Free Report) kicked off the September-quarter earnings with better-than-expected results. The largest U.S. bank by assets came up with earnings per share $2.92, much higher than the Zacks Consensus Estimate of $2.35. Revenues of $29.94 billion also came ahead of the estimated $28.63 billion.

Meanwhile, the healthcare giant posted earnings per share of $2.20 and revenues of $21.08 billion, comparing favorably with the Zacks Consensus Estimate for earnings of $1.99 and revenues of $20.40 billion. Buoyed by strong demand for its cancer and Crohn's disease treatments, JNJ lifted its full-year outlook.

UnitedHealth Group (UNH - Free Report) and Goldman (GS - Free Report) are scheduled to report on Oct 14 while International Business Machines (IBM - Free Report) is expected to release earnings on Oct 21. Intel (INTC - Free Report) will report on Oct 22 while American Express (AXP - Free Report) on Oct 23. Microsoft (MSFT - Free Report) is scheduled to report on Oct 28.

Let’s delve deeper into the third-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.

UnitedHealth has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock witnessed no earnings estimate revision over the past 30 days for the soon-to-be-reported quarter and delivered an earnings surprise of 11.64%, on average, over the last four quarters. It has a VGM Score of A.

Goldman has a Zacks Rank of 3 and an Earnings ESP of +8.36%. The company witnessed a solid earnings estimate revision of 11 cents over the past 7 days for the yet-to-be-reported quarter. Analysts raising estimates right before earnings with the most up-to-date information possibleis a good indicator for the stock. Goldman’s earnings surprise track over the preceding four quarters has also been robust, the average beat being 13.25%. The stock has a VGM Score of C.

International Business Machines has a Zacks Rank #3 and an Earnings ESP of 0.00%. It saw no earnings estimate revision activity in the past 30 days for the to-be-reported quarter and came up with a beat in each of the last four quarters, the average being 1.80%. IBM has a VGM Score of B.

Intel has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock witnessed no earnings estimate revision activity over the past 30 days for the to-be-reported quarter but delivered a trailing four-quarter earnings surprise of 15.30%, on average. It has a top VGM Score of A.

American Express has a Zacks Rank #4 and an Earnings ESP of -7.24%. However, it saw a positive earnings estimate revision of 7 cents over the past 7 days for the to-be-reported quarter. The company has an earnings surprise of 35.56%, on average, in the trailing four quarters. The stock has a VGM Score of B.

Microsoft has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock saw no earnings estimate revision over the past 30 days for the soon-to-be-reported quarter and pulled off an earnings surprise of 10.21%, on average, over the last four quarters. It has a VGM Score of C.

Bottom Line

With most blue-chip companies’ earnings scheduled for the coming days, investors should closely monitor the movement of the Dow ETF and grab any opportunity that arises from a surge in any of the 30 stocks.