The SPDR Dow Jones Industrial Average ETF Trust (DIA) holds a significant portion of its assets in the financial sector, with nearly one-seventh of the fund concentrated in just two bank stocks. According to the latest data, DIA allocates 26.31% of its portfolio to financials. Goldman Sachs Group Inc. (GS) is the fund's largest holding, representing 10.23% of the assets, while JPMorgan Chase & Co. (JPM) accounts for 3.84%.
This concentration is attributed to the Dow Jones Industrial Average's price-weighted methodology, which gives greater influence to stocks with higher nominal share prices. Consequently, Goldman Sachs, despite being smaller by market capitalization than many other constituents, tops the list of DIA holdings.
Investors in the ETF are closely watching the upcoming earnings reports from major banks, particularly Goldman Sachs and JPMorgan. Goldman Sachs is expected to report Global Banking & Markets revenue of $11.86 billion, a rise of more than 17% sequentially. However, management has warned that non-compensation expenses could increase by over $500 million in the third quarter due to higher transaction costs and technology investments. Additionally, the Fixed Income, Currencies, and Commodities (FICC) business is projected to weaken.
In contrast, JPMorgan is forecast to see earnings rise 17% to $5.93 per share on revenue of $51.23 billion. The bank anticipates growth in its Consumer and Community Banking, Commercial and Investment Banking, and Asset and Wealth Management divisions.
The article notes that Goldman Sachs carries a higher direct portfolio sensitivity for DIA. A 5% move in Goldman Sachs would contribute approximately 0.51 percentage points to the ETF's return, compared to about 0.19 percentage points for the same move in JPMorgan.
