Two-thirds of the Dow Jones Industrial Average has risen in market value this year, and the index itself has recovered after falling. Whether this is a sustainable phenomenon remains to be seen.
Dow Jones Industrial Average
The Dow Jones Industrial Average index is one of the main and at the same time one of the oldest indices of the American stock market. It consists of thirty of America's largest banks and companies that belong to various sectors. Therefore, in this review, we will traditionally focus on the representatives of the Dow Jones Industrial Average index.
We emphasize that both changes in income (abbreviated Paj in the table) and changes in EBITDA profits (abbreviated EBD in the table) are calculated on the basis of official financial reports provided by American companies and banks. As usual, we present EBITDA margins (EM% in the table) and return on assets (ROA%) and the latest relative financial indicators of market value.
Please note that the Salesforce company has not yet announced its results for the previous quarter.
As we can see in the presented table, the overall median of changes in performance remained positive, but in comparison with the second quarter of last year, it declined. The fall is also recorded in American industry and among representatives of the information technology sector. Meanwhile, both in the service branch and in the financial sector (the medians of changes in income and EBITDA profits are the highest in percentage terms) and in trade, only the medians of changes in income fell, while profits increased.
This time, among the large US companies and banks, the insurance company Travelers, whose EBITDA jumped even more than three hundred percent, improved its quarterly performance the most, two banks, namely JPMorgan Chase and Goldman Sachs, the information technology giant Microsoft, the operator of the online shopping website Amazon and a member of the financial sector. American Express. It should be emphasized that in all cases profits grew faster than income, which is, of course, a positive phenomenon. Meanwhile, declines in revenue and EBITDA profits during the quarter were recorded by aircraft manufacturer Boeing, industrial machinery manufacturer Caterpillar, information technology sector member Cisco Systems (the performance of which has deteriorated for the third consecutive quarter), chemical products manufacturer Dow and two well-known US companies, namely McDonald's and Procter & Gamble.
Among the twenty-nine representatives of the Dow Jones Industrial Average index, whose data we know, compared to the second quarter of last year, nineteen of them increased their EBITDA margin, so it is not surprising that the overall median of this indicator grew, as, by the way, in all other calculated cases, except information technology sector, but in this case the median EBITDA profitability remained the highest despite the fall. In the case of Boeing, this profitability indicator was with a minus sign, and here the largest can boast the well-known Visa, the technology giant Microsoft and the manager of the fast food restaurant chain McDonald's.
In the second quarter of this year, the highest ROA or return on assets was generated by the well-known Apple and the operator of the payment card network Visa. Meanwhile, the profitability index mentioned by two companies, i.e. Boeing and Intel, was negative this time, as they experienced a net profit. Compared to the second quarter of 2023, eleven representatives of the analyzed index increased their ROA, and as many as seventeen registered a fall, but despite this, the overall median of this indicator rose slightly from 1.8 to 1.9 percent. Growth was also recorded in the services sector, while in industry and finance the median asset returns did not change, while in the information technology and trade sectors, a general decline was recorded.
Based on the latest market value indicators (P/E, P/BV, P/S, EV/EBITDA and dividend yield) of the analyzed large American banks and companies, we see that their overall medians are currently neither extremely high nor particularly low, so, in a general sense, the stock market of this country is evaluated correctly. As usual, the financial sector stands out with the lowest mentioned indicators.
Since the start of this year, the overall median of the Dow Jones Industrial Average's stock price changes has been positive, reaching nearly nine percent, as the high-low ratio is 20 to 10, the same as in 2023. As we can see in the table, at least so far this year, the market value of representatives of the financial sector has been the most noticeable, while the least expensive are the equity securities of American industrial companies.
Among the analyzed representatives of the United States, the shares of Walmart, the world's largest shopping chain manager, rose the most this year, their value jumping by almost forty percent. Also, the capitalization of three financial institutions, namely American Express, Goldman Sachs and JPMorgan Chase, grew more noticeably. Meanwhile, the cheapest shares are led by Intel securities, whose price has already shrunk by as much as 58.5 percent since the beginning of this year. The market value of aircraft manufacturer Boeing fell thirty-one percent, while Nike fell 23.3 percent.
It's been an eventful month as the Dow Jones Industrial Average fell, followed by a rebound. Whether this is a sustainable phenomenon remains to be seen.
Walmart's share price has broken out of the growth channel through the top and is storming to a new all-time high.
After the fall, American Express stock price recovered and moved towards new all-time highs.
After a period of correction, Goldman Sachs stock price bounced back above the uptrend line. If it turns out that this is a sustainable phenomenon, then growth has begun.
JPMorgan Chase's share price remains in the current growth channel and will retest its upper part, after which the further direction will become clear.
After the bounce, we saw a new bearish wave in Intel stock price, during which the Fibo level of 88.6 percent was reached. If it holds, we could see a bigger bounce.
After the falling wave, we currently have a kind of consolidation in Boeing's share price.
Nike's share price has fallen below the bottom formed during the previous correction, and now we have a test of the sustainability of this move. If you manage to rise above the bottom formed during the previous fall, then the rebound has begun, otherwise, the correction may deepen.
UnitedHealth Group's stock price rose above the top of the horizontal consolidating channel last month. Whether this is a sustainable phenomenon remains to be seen.
Caterpillar's share price remains in the current uptrend channel and has risen above the downtrend line this month. If it turns out that this is a sustainable phenomenon, then growth has begun.
Merck's share price remains in an extremely long-term bullish channel, but has been correcting for a month in a row after hitting a record high.
The rebound in 3M's share price, which began back in the spring, continues.
Amazon's share price fell below the uptrend line, but we saw a rebound after that. Whether this is a sustainable phenomenon remains to be seen.
After the bounce, we saw a decline in Walt Disney's share price, which continues and is approaching the bottom formed during the previous recession.
After a period of decline, we currently have a kind of consolidation in the Salesforce share price.
