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 (read: 5 ETF Ways to Trade Surging Inflation ).
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.
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 (read: Leveraged ETFs to Bet on Market Rebound for Big Gains ).
Below, we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund's basket:
Cisco CSCO : 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% ) (read: ETFs to Buy as Cisco Returns to Revenue Growth in 2 Years ).
Apple Inc. AAPL : The stock has gained about 10.6%. It has seen positive earnings estimate revision of six cents over the past week for this fiscal year (ending September 2018) with an expected growth rate of 13.69%. Apple currently has a Zacks Rank #3 and a VGM Score of C. The stock falls under the bottom-ranked Zacks industry ( bottom 4% ) and occupies the sixth position in DIA with 4.6% exposure.
Goldman Sachs Group GS : This stock takes the second spot and accounts for 7.3% of assets in the fund's basket. It has gained 7.4% and witnessed no earnings estimate activity for this year over the past week. Its earnings are expected to grow 9.11%. Goldman has a Zacks Rank #3 and a VGM Score of D. It belongs to a top-ranked Zacks industry ( top 8% ).
Caterpillar Inc. CAT : This stock makes up for the eighth spot in the fund's basket with 4.4% allocation and has gained 7.2% in the same time frame. The stock saw no earnings estimate revision activity for this year over the past week and has an estimated year-over-year earnings growth of 32.12%. Caterpillar belongs to a top-ranked Zacks industry ( top 13% ). It has a Zacks Rank #2 and a VGM Score of D. You can see the complete list of today's Zacks #1 Rank stocks here .
Boeing Company BA : The stock surged nearly 7.1% over the past week and accounts for the top position in DIA with 9.5% share. It carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. The company has seen solid earnings estimate revision of 36 cents for this year over the past week, and has an expected earnings growth rate of 15.86%. The stock falls under a top-ranked Zacks industry ( top 28% ).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.