Will Dow ETFs Continue To Shine In Q3 Earnings?

While Wall Street is scaling multiple highs on Trump’s pro-growth reforms, the Dow Jones Industrial Average has been an outperformer since election last year. This is because a strong rotation in leadership in the large-cap domestic space has benefited Dow Jones more than its other large-cap counterparts like the S&P 500.

Notably, the Dow Jones has returned 24.2% since the Election Day compared to a gain of 18.9% for the S&P 500. With this, the Trump rally is now closer to become the greatest in 85 years. As investors are gearing up for the Q3 earnings season, its proxy version, SPDR Dow Jones Industrial Average ETF (DIA – Free Report) , 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 over $18.7 billion and average daily volume of 2.5 million shares. Holding 30 blue chip stocks, the fund is widely spread across components with none holding more than 7.8% share. Industrials (22.5%), financials (16.9%), information technology (16.9%), consumer discretionary (14.4%) and healthcare (13.1%) are the top five sectors. DIA charges 17 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. 

Let’s delve into the Q3 earnings picture that will likely set up the movement of the fund in the coming days.

Q3 Earnings Trends

Total Q3 earnings are expected to be up 2.3% from the same period last year on 5% higher revenues. With double-digit growth in each of the first two quarters of the year and earnings growth last quarter of the year currently expected to be in high single digits, Q3 growth is on track to be the lowest this year.

The earnings season has gotten underway with nearly one-fourth of the blue chip firms expected to announce their results this week and in the next. JPMorgan Chase (JPM – Free Report) is expected to release its results on Oct 12.

International Business Machines (IBM – Free Report) is scheduled to report on Oct 16 while Goldman (GS – Free Report) , UnitedHealth Group (UNH – Free Report) , and Johnson & Johnson (JNJ – Free Report) will report on Oct 17. Other companies like American Express (AXP – Free Report) will come up with their earnings report on Oct 18 while General Electric (GE – Free Report) and Procter & Gamble Company (PG – Free Report) have their earnings release slated for Oct 20.