U.S. bourses hit yet another high on Friday and logged in the third weekly gain. In particular, the Dow Jones Industrial Average is the biggest beneficiary of the rotation in leadership in the large cap domestic space. The index topped the 20,000 milestone for the first time on January 25 and then retreated on concerns over Trump's protectionist action and lack of clarity on policy reforms (read: Market Hitting New Highs: Bargain ETFs & Stocks to Buy Now ).
However, the optimism returned in the last couple of days following Trump's talks of tax cuts and infrastructure spending. This reignited a post-election rally that is expected to continue on renewed hopes that Trump is acting on his pro-growth promises. Further, the continuation of friendly U.S. and Japan trade ties thanks to an amicable Trump-Abe's meeting has eased nervousness relating to the currency policy, which dominated the market for weeks. With this, the President put his focus back on boosting economic growth and a strong dollar.
Trump has already enacted a slew of his proposed reforms including deregulation. This has bolstered confidence and increased investors' risk appetite.
Another major catalyst is solid corporate Q4 earnings. As per the latest Earnings Preview , the Q4 earnings season is faring better than recent years with not only earnings growth set to reach the highest level in two years but total earnings for the quarter on track to hit a new record, surpassing the previous record achieved in Q4 of 2014.
Though SPDR Dow Jones Industrial Average ETF DIA tracking the index has gained immense popularity since the election, it pulled in the maximum amount of money last week among the other large cap ETFs. Notably, the ETF gathered the highest capital of $1.1 billion last week as per etf.com , taking the year-to-date inflows to $2.6 billion (read: Trump Tax Talk Boosts Market: Time for Momentum ETFs? ).
Let's take a closer look at the fundamentals of DIA and its performance.
DIA in Focus
DIA holds 31 stocks in its basket with each security holding no more than 8.2% 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 more than 3.5 million shares a day on average.
The fund gained 1.2% last week and 2.7% in the year-to-date timeframe. It has a Zacks ETF Rank of 2 or 'Buy' rating with a Medium risk outlook. Though most of the stocks in the fund's portfolio have delivered impressive returns over the past week, only a handful are the largest gainers of Trump and earnings effect.
Below we highlight those five best performing stocks in the ETF with their respective positions in the fund's basket (read: January 2017 ETF Asset Scorecard ):
Best Stocks of DIA Over Last Week
NIKE Inc. NKE : The stock flew higher last week, gaining 7.4%. NIKE - one of the largest sellers of athletic footwear and athletic apparel in the world - has seen no earnings estimate revision over the past week. It has a Zacks Rank #3 (Hold) with a VGM Style Score (V stands for Value, G for Growth and M for Momentum) of D and falls in the ugly Zacks Industry Rank in the bottom 14%. Nike is the twenty fourth firm accounting for just 1.9% of the total assets.
Caterpillar Inc. CAT : Caterpillar is the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The stock saw no earnings estimate revision over the past week. It has a Zacks Rank #3 with a VGM Style Score of B and boasts a solid Industry rank in the top 29%. Shares of Caterpillar were up 3.3% last week. Notably, the stock is among the top 15 holdings, accounting for 3.2% share.
Apple AAPL : It currently has a Zacks Rank #3 with a VGM Style Score of A but falls in the bottom 23% of Zacks Industry Rank. Apple is engaged in the designing, manufacturing and marketing of mobile communication and media devices, personal computers, and portable digital music players. This stock has also not witnessed any earnings estimate revision over the past week. AAPL gained 2.8% last week and occupies the seventh position in the fund's basket with 4.5% allocation.
International Business Machines IBM : This stock occupies the third position in the fund's basket with 6% share. Having a Zacks Rank #3 and a VGM Style Score of B, the stock has a solid Zacks Industry rank in the top 26%. IBM, which provides information technology (IT) products and services worldwide, added 2.4% last week and has seen no earnings estimate revision (read: IBM Tops, Guides Higher: ETFs in Focus ).
3M Company MMM : This is a diversified technology company with leading positions in consumer and office; display and graphics; electronics and telecommunications; health care; industrial; safety, security and protection services; transportation and other businesses. It also had a solid run, having gained 2.3% last week. MMM takes the top spot in the fund's basket with 6% allocation. The stock saw positive earnings estimate revision by a penny over the past week for this year. It has a Zacks Rank #3 with a VGM Style Score of B and boasts a solid Industry rank in the top 29%.
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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.