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The Dow Jones Industrial Average is trading near its peak on optimism over the strong second-quarter corporate profits. The Q1 earnings season kicked off with Goldman (GS - Free Report) and JPMorgan Chase (JPM - Free Report) reporting better-than-expected quarterly results.

Goldman’s earnings strength came from its investment banking business, which witnessed the second-best-ever quarter after a record first quarter. Meanwhile, JP Morgan's earnings were bolstered by a strong economy and the release of credit reserves.

The solid run in the blue-chip index is likely to continue given the improvement in the overall earnings expectations. Total S&P 500 earnings are expected to be up 62.2% from the same period last year on 18.2% higher revenues. The earnings projection reflects an improvement from 50.6% growth expected at the start of Q2 and follows 49.3% earnings growth in Q1. Most of the strength is due to easy comparisons to last year’s pandemic-hit period.

Four of the 16 Zacks sectors — consumer discretionary, autos, energy & transportation — which actually lost money in Q2 2020 are now projected to report positive earnings. The other 12 sectors are also expected to see positive year-over-year earnings growth.

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 most popular ETFs in the large-cap space with AUM of $30.1 billion and an average daily volume of 3.6 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components with each holding less than 7.8% share. Information technology (21.9%), healthcare (17.1%), industrials (16.7%), financials (16.1%) and consumer discretionary (13.6%) are the top five sectors. DIA charges 16 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk. 

Nearly two-tenth of the blue-chip firms are expected to announce results this week and in the next. UnitedHealth (UNH - Free Report) is expected to report on Jul 15 while International Business Machines (IBM - Free Report) is scheduled to report on Jul 19. Coca-Cola Company (KO - Free Report) and Johnson & Johnson (JNJ - Free Report) is expected to release earnings on Jul 21. Intel (INTC - Free Report) and Dow Inc. (DOW - Free Report) will release earnings on Jul 22.

Let’s delve deeper into the second-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 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 #2 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 20.2%, on average, over the last four quarters. It has a Growth Score of B.

International Business Machines has a Zacks Rank #3 and an Earnings ESP of 0.00%. It also saw no earnings estimate revision in the past 30 days for the to-be-reported quarter. The company came up with a beat in each of the last four quarters, the average being 6.33%. It has a VGM Score of A.

The Coca-Cola Company has a Zacks Rank #3 and Earnings ESP of 0.00%. The company saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. It delivered an average earnings surprise of 12.96% in the last four quarters. The stock has an unimpressive VGM Score of C.

Johnson & Johnson has a Zacks Rank #3 and an Earnings ESP of 0.00%. The company witnessed no earnings estimate revision over the past 30 days for the yet-to-be-reported quarter. It’s earnings surprise track over the preceding four quarters has also been robust, with the average beat being 9.19%. The stock has a VGM Score of B.

Intel has a Zacks Rank #2 and an Earnings ESP of -0.40%. 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 17.69%, on average, over the last four quarters. It has a VGM Score of B.

Dow has a Zacks Rank #1 and an Earnings ESP of +3.50%. It saw positive earnings estimate revision of 12 cents in the past 30 days for the to-be-reported quarter. The company came up with a beat in each of the last four quarters, the average being 26.47%. It has a VGM Score of A.

Bottom Line

With some 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.