5 Hot Stocks Leading The Dow ETF Rebound

After a brutal selloff last week, Wall Street strongly bounced back recovering about half of its losses. The major bourses rose for the fifth consecutive day, with the Dow Jones Industrial Average regaining its 25,000 mark.   

As inflation fears fizzled out, investors again shifted their attention to long-term fundamentals, which remains bullish for the stock market. Strong corporate earnings, optimism on global growth and the euphoria surrounding the new tax legislation are acting as the key catalysts. A massive $1.5-trillion tax cut will create an economic surge, boosting job growth and reflation trade. It will further accelerate earnings, leading to increased dividend and buyback activities. Additionally, low unemployment, higher consumer spending, and rising consumer confidence are adding to the strength.

Given this, SPDR Dow Jones Industrial Average ETF (DIA – Free Report) tracking the Dow Jones index has gained 5.8% over the past week. Let’s take a closer look at the fundamentals of DIA and its performance.

DIA in Focus

DIA holds 30 stocks in its basket with each security holding no more than 9.53% share. The fund is widely spread across sectors with industrials, information technology, and financials being the top three. It charges 17 bps in fees per year from investors and trades in heavy volume of around 3.9 million shares a day on average.

The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Though most of the stocks in the fund’s portfolio have strongly rebounded, a few led the way higher over the past five days.

Below, we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund’s basket:

Cisco (CSCO – Free Report): The stock surged 11.5% over the past week. It has 1.2% exposure in the fund’s basket and saw no earnings estimate revision for this fiscal year (ending July 2018) over the past week. Cisco has an expected earnings growth of 3.35% for this fiscal year. The company has a Zacks Rank #3 (Hold) and a VGM Score of B. However, it belongs to a bottom-ranked Zacks industry (bottom 10%).