4 Dow Stocks To Buy As Markets Ignore Trade Tensions

The Dow enjoyed its best advance in nearly a month on Jul 9, gaining triple digits to close in the black for the third consecutive session. The blue-chip index heralded a broader rally for U.S. stocks. Notable gainers for the day were financials and industrials, sectors that have been dragged down by trade tensions.

But it now seems that investors are willing to ignore such concerns following the release of bullish economic data. Wall Street is also waiting expectantly for what will likely be another strong earnings season. Given these factors, it makes sense to pick select Dow stocks as markets choose to focus on broader fundamentals.

Banks, Industrials Fuel Market Rally

Bank shares were the primary catalysts to Monday’s gains. Shares of JPMorgan Chase (JPM - Free Report), Bank of America (BAC - Free Report), Citigroup (C - Free Report) and Goldman Sachs (GS - Free Report) gained 3.1%, 3.6%, 2.7% and 2.8%, respectively. JP Morgan, Goldman Sachs and Caterpillar (CAT - Free Report), which gained 4.1%, were the biggest gainers for the Dow.

As a result, the Financial Select Sector SPDR (XLF) gained 2.3%. Among other notable gainers were industrials with the Industrial Select Sector SPDR (XLI) gaining 1.9%. Shares of Boeing (BA - Free Report) gained 2.2%. Monday’s gains helped the Dow enter the positive territory for 2018. The index is now up 0.2% year to date.

The United States’ imposition of tariffs on $34 billion of Chinese imports and Beijing’s retaliation have raised trade tensions recently. But analysts feel that the possibility of a trade war in the short term has declined. This is evident from the resurgence of financials and industrials, sectors which had been hurt by trade worries.

Economic Data, Upcoming Earnings Dispel Trade Tensions

Instead, investors are choosing to focus on economic data, which has come in exceptionally strong recently. In May, consumer borrowing increased substantially, per data from the Federal Reserve. Total consumer credit increased $24.6 billion to a seasonally adjusted level of $3.9 trillion. This represents an annual pace of 7.6%, the sharpest since November.