Dow ETF Set to Rise Further as Q2 Earnings Kick Off

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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 and JPMorgan Chase JPM 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 (read: Sector ETFs, Stocks to Bet on Q2 Solid Earnings Expectation).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, which tracks the Dow Jones Industrial Average Index, is in the spotlight.DIA in FocusThis 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 (read: 3 Sector ETFs That Have More Room for Growth in Q3).   Nearly two-tenth of the blue-chip firms are expected to announce results this week and in the next. UnitedHealth UNH is expected to report on Jul 15 while International Business Machines IBM is scheduled to report on Jul 19. CocaCola Company KO and Johnson & Johnson JNJ is expected to release earnings on Jul 21. Intel INTC and Dow Inc. DOW 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 WhispersAccording 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 (read: 5 Top-Performing Semiconductor ETFs YTD).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 LineWith some blue-chip companies’ earnings scheduled for the coming days, investors should closely monitor the movement of the Dow ETF and grab an opportunity that arises from a surge in any of the 30 stocks. Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Intel Corporation (INTC): Free Stock Analysis Report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report International Business Machines Corporation (IBM): Free Stock Analysis Report CocaCola Company The (KO): Free Stock Analysis Report Johnson & Johnson (JNJ): Free Stock Analysis Report Dow Inc. (DOW): Free Stock Analysis Report SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research
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