Dow Jones ETF DIA Outperforms in January: Here is Why

The Dow Jones-based exchange-traded fund (ETF) SPDR Dow Jones Industrial Common ETF Belief DIA has gained about 6% in January (as of Jan. 30, 2025). As compared, the S&P 500 superior 3.5% in January, and the Nasdaq Composite added 2.1%.

Let’s discover out what drove the rally within the Dow Jones.

Much less Tech Publicity

Know-how Choose Sector SPDR Fund XLK added solely 0.1% in January (as of Jan. 30, 2025) as a result of DeepSeek rout and rising worries over the profitability of Large Tech’s large AI investments. DeepSeek, a Chinese language startup creating AI fashions, grabbed headlines with the discharge of its new R1 mannequin in late January. In accordance with Yahoo Finance, the corporate revealed that coaching the R1 mannequin price simply $5.6 million, considerably much less in comparison with the $100 million required to coach OpenAI’s GPT-4 mannequin.

This raises essential questions on AI funding and the potential rise of extra cost-efficient synthetic intelligence brokers, which might disrupt the present market dynamics (learn: Will 2025 See Slowing AI Investments in Big Tech? ETFs in Focus).

The Dow Jones focuses about 20% on the Data Know-how sector whereas the S&P 500 has about 30% give attention to the tech sector and the Nasdaq has about 60% publicity to it. In consequence, through the tech rout of January, the Dow Jones was much less hit.

Upbeat Large Financial institution Earnings

Monetary Choose Sector SPDR Fund XLF added about 7.4% in January. An improved rate of interest outlook and upbeat large financial institution earnings helped the house surge. The Dow Jones places the very best publicity to this sector and, in consequence, benefited probably the most. Word that the Dow Jones’ largest holding — Goldman Sachs GS shares — jumped about 12% in January.

Trump 2.0 in 2025

The 12 months 2025 is prone to deliver many surprises within the type of the Trump 2.0 period, its impression on world commerce and inflation, and the resultant Fed strikes. If Trump’s protectionist agenda and tariff struggle drive up home inflation, we might even see hawkishness within the Fed’s ongoing dovish stance. The speed cuts in 2025 could also be decrease by way of each frequency and magnitude.

A less-dovish Fed and a high-rate atmosphere will possible be extra detrimental to the high-growth tech shares than value-centric financials shares. And because the Dow Jones has a greater worth quotient than the S&P 500 and the Nasdaq, the previous might fare higher within the preliminary months of 2025.

Wall of Fear for the Dow Jones

The way forward for one of many largest Dow Jones elements — UNH — is unsure within the Trump period. Though the medical insurance corporations’ shares gained 8% in January, Trump mentioned, “We will knock out the intermediary.” This very remark and a few associated authorities stances could go towards the UNH inventory anytime quickly.

The Dow Jones’ largest publicity is in monetary shares. If the geopolitical dangers rise within the Trump 2.0 period as a result of tariff struggle, we might even see a subdued enhance in long-term U.S. treasury bond yields, ensuing within the flattening of the yield curve. Financials underperform in such a state of affairs.

Backside Line

So, general, the Dow Jones’ efficiency needs to be moderate-to-upbeat in 2025, if not nice. Buyers can maintain an in depth tab on the DIA ETF. The present interval of excessive rates of interest is proving extra favorable for the Dow Jones than for the S&P 500 and the Nasdaq.

Holding 30 blue-chip shares, the fund DIA is broadly unfold throughout elements, with every having lower than an 8.77% share. Financials (24.8%), data expertise (19.9%), healthcare (14.7%), client discretionary (13.98%), and industrials (12.9%) are the highest 5 sectors.