The U.S. economy has shown signs of improvement over the past few months, leading some investors back into the domestic large-cap market. SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gives investors exposure to some of the most reliable U.S. large-cap companies around.
“The European sovereign debt crisis has stoked fears of contagion and another global financial crisis. This has elevated volatility and depressed stocks prices. In the meantime, earnings in the U.S. have held up remarkably well. Solid earnings and low stock prices translate into attractive valuations. Of course, the market may be expecting that earnings will roll over in a global economic slow down. Currently, analysts are expecting 10% earnings growth over the next year, putting the S&P 500 at an attractive forward price/earnings ratio of 11.5 times,” Michael Rawson wrote in a recent Morningstar fund analysis. [Is it Time to Buy the Dips with ETFs?]
DIA holds only the most well-established, iconic multinational firms, while using a share-price weighting methodology. Dow components are selected by the editors of the Wall Street Journal. The index has had a 0.97 correlation to the S&P 500 over the past decade, with lower volatility, reports Rawson. [What a Golden Cross Means for Stock ETFs]
Top sectors include industrials, information technology, consumer staples, energy and consumer discretionary. [Stock ETFs See Bullish Technical Sign]
Home Depot (NYSE: HD) has helped the Dow lately on strong sales, reports Doug Fabian with MoneyShow.
The Dow ETF is trading at the highest level since 2008.
SPDR Dow Jones Industrial Average ETF
Tisha Guerrero contributed to this article.