Dow Turns Red YTD: 5 Stocks in ETF Still in Green

After a strong rally, Wall Street has lost momentum this month, with the Dow Jones logging in the fourth consecutive week of decline. The blue-chip index fell 3% last week, turning red from a year-to-date look. This marks the longest losing streak in 10 months (read: 5 Most Heavily Shorted ETFs So Far This Year).

SPDR Dow Jones Industrial Average ETF DIA, tracking the Dow Jones Index, is still up a modest 0.3% and most of the stocks have helped it to stay tall. These include American Express Company AXP, Salesforce Inc. CRM, The Goldman Sachs Group Inc. GS, Microsoft Corporation MSFT and Apple Inc. AAPL.

Hot economic data lately suggests stronger economic activity and have rekindled worries about a longer-than-expected Fed rate hike. U.S. consumer spending increased by the most in nearly two years in January amid a surge in wage gains, while inflation accelerated. Hiring surprisingly surged with the economy adding a solid 517,000 jobs in January. The unemployment rate fell from 3.5% to 3.4%, the lowest since 1969. Business activity unexpectedly rebounded in February, reaching its highest level in eight months, while U.S. builder confidence rose for the second consecutive month to the highest level since September 2022.

Meanwhile, Americans have been regaining confidence in the U.S. economy, with consumer sentiment in early February jumping to its highest level in 13 months, per the latest University of Michigan’s consumer survey (read: 5 ETFs to Benefit as Monthly Inflation Drops to 2-Year Low).

Inflation has also come in hotter than expected. The Federal Reserve’s preferred inflation gauge accelerated in January at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year. Earlier this month, per the government report, the consumer price index surged 0.5% in January following a 0.1% increase in December. It climbed 6.4% year over year, down from a peak of 9.1% in June but far above the Fed’s 2% inflation target.

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 $28.5 billion and an average daily volume of 3.5 million shares. Holding 30 blue chip stocks, the fund is widely spread across components, with each holding less than 10% share. Healthcare (19.8%), Information Technology (19.8%), Financials (17.1%), Industrials (14.9%), 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 outlook.

Best Performing Stocks of DIA

American Express is a diversified financial services company, offering charge and credit payment card products, and travel-related services worldwide. The stock jumped about 12% over the past month and its earnings are expected to grow 13.7% this year.

American Express makes up for 3.5% of assets in DIA and has a Zacks Rank #3 (Hold). It has a VGM Score of B.

Salesforce is the leading provider of on-demand Customer Relationship Management software, which enables organizations to better manage critical operations, such as sales force automation, customer service and support, marketing automation, document management, analytics and custom application development. The stock has risen 4.7% in a month and accounts for 3.3% in the fund’s basket.

Salesforce has an expected earnings growth rate of 18.9% for the fiscal year (ending January 2024). It has a Zacks Rank #2 (Buy).

Goldman Sachs is a leading global financial holding company providing IB, securities, investment management and consumer banking services to a diversified client base. The stock makes up for 7.2% of assets in the DIA portfolio.

Goldman Sachs gained 4.5% in a month and has an expected earnings growth rate of 8.6% for this year. It has a Zacks Rank #3.

Microsoft is one of the largest broad-based technology providers in the world. The company dominates the PC software market, with more than 80% of the market share for operating systems. MSFT gained 3% in a month and accounts for 5.1% in the fund’s basket (read: What Tech Crash? 5 Tech ETFs Up Double-Digit Past Month).

Microsoft is expected to see an earnings growth of 1.4% for the fiscal year (ending June 2023) and has a Zacks Rank #3.

Apple designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod. Shares of AAPL are up about 3% over the past month.

Apple’s earnings are expected to decline 1% for the fiscal year (ending September 2023). It accounts for a 3% share in DIA and has a Zacks ETF Rank of 3. It has a VGM Score of B.

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