The Dow Jones and its exchange-traded funds (ETFs) like DIA have done well this year and are hovering near their highest level on record. It was trading at $46,200, up by over 26% from its lowest level this year. This article identifies some of the top companies driving the blue-chip index.
Why the Dow Jones Index has jumped
The Dow Jones Index has jumped this year for several reasons. First, like the S&P 500 and Nasdaq 100 indices, it is benefiting from the ongoing artificial intelligence tailwinds. This is notable as some key companies in the AI industry like Nvidia and Microsoft, are some of its biggest constituents.
Second, it has jumped as investors embrace the new normal on trade. One main reason for this is that Donald Trump’s tariffs have not had a major impact on earnings. Data compiled by FactSet shows that the S&P 500 Index had an earnings growth of 11% in the second quarter.
12% of the companies have published their third-quarter earnings. Their earnings growth was about 8.8%, the ninth quarter of growth.
Third, companies have benefited from the actions of the Federal Reserve, which has started to cut interest rates. It slashed rates by 0.25% in its September meeting and hinted of more to come.
Polymarket traders have placed odds of another rate cut in October to 96%. The stock market does well when the Fed is slashing interest rates.
Caterpillar (CAT)
Caterpillar stock price has jumped this year, making it the best-performing Dow Jones constituent. It has jumped by 40% this year and by 100% from its lowest point this year.
This growth is likely because of its mining equipment business, which is benefiting from the ongoing surge in prices.
The most recent results showed that the company’s revenue dropped slightly to $16.6 billion. Its backlog jumped by $2.5 billion, while the company returned $1.5 billion to shareholders through dividends and buybacks.
Nvidia (NVDA)
Nvidia stock price has jumped by 44% this year, making it the second-best-performing company in the Dow Jones Index. It has soared by over 26,367% in the last decade, making it one of the best-performing companies in Wall Street.
Nvidia has done well because its leading role in the artificial intelligence industry. It offers the top chips that are used by most AI companies globally. As a result, its revenue growth has continued to accelerate in the past few years, and analysts anticipate this trend to continue.
Goldman Sachs (GS)
Goldman Sachs stock price has jumped by 30% this year, making it one of the top gainers in the Dow Jones. Its surge is primarily because of the ongoing resurgence of deal-making in the US.
Recent data shows that the company’s business is booming, with its third-quarter revenue rising to $15.18 billion. Its Global Banking and Markets revenue rose by 18% to $10.12 billion, while the asset and wealth management jumped by 17% to $4.4 billion. This growth will likely continue as deal-making jumps.
The other top gainers in the Dow Jones are companies like IBM, JP Morgan, Microsoft, Walmart, Boeing, Cisco, and 3M. IBM and Microsoft are benefiting from the ongoing AI tailwinds, while JPMorgan has seen strong growth across all its businesses.
On the other hand, the top laggards in the index and ETF are companies like UnitedHealth, Salesforce, Merck, Nike, Honeywell, and Procter & Gamble.
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