The Dow Jones Industrial Average, which emerged stronger than the other two major indices this year, had its biggest weekly drop since October, losing 2.5%. The slide came amid renewed concerns about economic growth and Trump’s tariff threat (read: Dow Jones ETF DIA Getting All Love: Here's Why).
SPDR Dow Jones Industrial Average ETF DIA, which tracks the Dow Jones, shed 1% last week. While most of the stocks in the fund’s portfolio dropped, a few survived the slump. We have highlighted five of those — Merck & Co. Inc. MRK, Verizon Communications VZ, Johnson & Johnson JNJ, The Coca-Cola Company KO and Amgen AMGN.
A barrage of economic data last week has sparked concerns over economic growth. U.S. business activity nearly stalled in February due to growing fears over tariffs on imports and deep cuts in federal government spending. S&P Global’s flash U.S. Composite PMI Output Index, which gauges both manufacturing and services, dropped from 52.7 in January to 50.4, marking its weakest level since September 2023.
Consumer sentiment dropped as inflation roared back. The University of Michigan consumer sentiment index fell to a 15-month low of 64.7 in February, down from a final reading of 71.7 in January. Homebuilder sentiment hit a five-month low in February. Concerns are building up in the homebuilder space that tariffs would raise the cost of building materials, including lumber and appliances, thereby leading to elevated home prices and reduced affordability.
Further, consumers' 12-month inflation expectations deteriorated to 4.3%, the highest reading since November 2023, from 3.3% in January. Over the next five years, consumers saw inflation running at 3.5%, the highest since 1995, compared with 3.2% in January, according to the latest survey. The spike came as President Donald Trump’s tariffs plan will translate into higher prices.
Let’s take a closer look at the fundamentals of DIA.
With AUM of $39 billion, DIA holds 30 stocks in its basket, with each security holding no more than 9% share. The fund is widely spread across sectors, with financials, information technology, healthcare and consumer discretionary being the top three. It charges 16 basis points in fees per year from investors and trades in heavy volume of around 3 million shares a day on average. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Here are the five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Merck operates as a healthcare company worldwide. It boasts more than six blockbuster products in its portfolio, with PD-L1 inhibitor Keytruda approved for several types of cancer and alone accounting for around 50% of its pharmaceutical sales. Merck has gained about 6% last week and accounts for 1.2% in the fund’s basket. Merck is expected to see earnings growth of 18% for this year and has a Zacks Rank #3 (Hold).
Verizon offers communication services in the form of local phone service, long-distance, wireless and data services. It has gained about 4% last week and accounts for 0.6% in the fund’s basket. Verizon is expected to see earnings growth of 2.2% for this year and has a Zacks Rank #3 (read: Assessing Telecomm ETFs Post Q4 Earnings Beat).
Johnson & Johnson operates through pharmaceuticals and medical devices divisions. It has more than 275 subsidiaries, which clearly means that the business is extremely well-diversified. The stock has an estimated earnings growth rate of 6% this year. JNJ was up 3.2% last week and has a Zacks Rank #3.
Coca-Cola is a beverage company that manufactures, markets and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors, water, sports, coffee, and tea juice, value-added dairy and plant-based beverages and other beverages. It has jumped nearly 3% over the past week and accounts for 0.97% in the fund’s basket. KO is expected to see earnings growth of 2.78% for this year and has a Zacks Rank #3.
Amgen is one of the biggest biotech companies in the world, with a strong presence in the oncology/hematology, cardiovascular disease, neuroscience, inflammation, bone health, nephrology and neuroscience markets. The stock has an estimated earnings growth rate of 3.93% for this year. Amgen was up 2% last week and has a Zacks Rank #3.
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CocaCola Company (The) (KO) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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