6 Dow Stocks That Should Drive These ETFs Higher

By Sanghamitra Saha, Zacks Investment Research

http://bit.ly/2mElTX7

The splendid run of the Dow Jones Industrial Average since Trump’s win in the presidential election is known to all. In its northbound march, the blue-chip index crossed 25,000 for the first time in its 120-year history on Jan 4 and was just 200 points away from hitting 26,000 as of Jan 12, 2018. The index breached the 20,000-mark on Jan 6, 2017 and the rest is history.

6 Dow Stocks That Should Drive These ETFs Higher
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Dow Jones Industrial Average has surged 60.3% in the last two years and gained about 30.1% in the last year (as of Jan 12, 2018). Trump’s tax reform and promises of deregulation acted as the wind beneath the wings.

While almost all stocks staged solid performances lately on the passing of the tax reform, a few are likely to soar higher in the days to come.

Below we highlight those stocks and the related ETFs that are set to gain ahead.

Dow Stocks That Should Drive These ETFs Higher: Boeing Co (BA)

As per an article published on MarketWatch, Boeing Co (NYSE:BA) indicated that it would shell out $300 million on workforce-related and charitable investments. The tax reform enables Boeing “to better compete on the world stage and give us a stronger foundation for the investment in innovation, facilities and skills that will support our long-term growth.”

The Zacks Rank #3 (Hold) stock has about 11% weight in iShares U.S. Aerospace & Defense ETF (BATS:ITA), 7% focus on PowerShares Aerospace & Defense (NYSEARCA:PPA), and another 7% on Industrial Select Sector SPDR Fund (NYSEARCA:XLI).

Dow Stocks That Should Drive These ETFs Higher: Wal-Mart Stores Inc (WMT)

Wal-Mart Stores Inc (NYSE:WMT) announced recently that it plans to use its tax savings by hiking the starting pay for hourly workers to $11, effective during the Feb 17, 2018 pay cycle and paying up to $1,000 in a one-time cash bonus to suitable associates based on seniority.

Wal-Mart indicated that it paid high effective tax rates for years. So, the reduction in the corporate tax rate will make the United States more competitive on the global stage, and boost investment at the domestic level.

The Zacks Rank #2 (Buy) stock puts about 9.9% weight in iShares Edge MSCI Multifactor Consumer Staples ETF (BATS:CNSF) and 7.9% in Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP).

Dow Stocks That Should Drive These ETFs Higher: Caterpillar Inc. (CAT)

Caterpillar Inc. (NYSE:CAT) expects the bill to be “positive” for the company and American manufacturers. Caterpillar also agrees about a more competitive environment in the United States and around the world. The access to overseas cash without bearing any additional U.S. taxes would be a great positive for the company.

The Zacks Rank #2 stock has 4.5% weight in SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) and 4.2% focus on Guggenheim Dow Jones Industrial Average Dividend ETF (NYSEARCA:DJD).

Dow Stocks That Should Drive These ETFs Higher: The Coca-Cola Co (KO)

The Coca-Cola Co (NYSE:KO) said the bill would make it easier for the company to reinvest in its U.S. business. The reform would better enable the company to reinvest in the U.S. business system as it is on its way to becoming a total beverage company.

The Zacks Rank #3 stock has about 9.5% exposure to Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) and 9.2% focus on Fidelity MSCI Consumer Staples Index ETF (NYSEARCA:FSTA).

Dow Stocks That Should Drive These ETFs Higher: Travelers Companies Inc (TRV)

Travelers Companies Inc (NYSE:TRV) is reportedly among the companies offering employees bonuses of $1,000 each if they earn $75,000 or less annually. The company intends to pass on the tax benefits to some front-line employees.

The Zacks Rank #1 stock has about 8% exposure to PowerShares KBW Property & Casualty Insurance Portfolio (NASDAQ:KBWP) and 5.2% focus on iShares U.S. Insurance ETF (NYSEARCA:IAK). The Zacks Industry Rank is in the top 19%.

Dow Stocks That Should Drive These ETFs Higher: Cisco Systems, Inc. (CSCO)

Cisco Systems, Inc. (NASDAQ:CSCO) also believes that the previous tax laws made American companies non-competitive in the overseas markets.

The Zacks Rank #3 stock has 8.8% weight in iShares North American Tech-Multimedia Networking ETF (NYSEARCA:IGN) and 8.4% in First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV).

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