Last Friday, the US blue-chip stock index —$Dow Jones Industrial Average (.DJI.US)$It closed above 40,000 points for the first time in its 128-year history, which is also a new milestone in the US market.

What's behind the Dow's record high?

Recently, one of the key reasons driving the rise in US stocks is the expectation that the US economy will achieve a soft landing — while the economy remains strong while inflation cools down, which has spurred people to bet that the Federal Reserve will ease monetary policy as soon as possible later this year.

In addition, there are also market opinions that the reason behind the Dow's record high may also be its “cheap” advantage that its performance has lagged behind the S&P 500 and NASDAQ for a long time.

Over the past four and a half years, the Dow rose 40%. Over the same period, the S&P rose 64% and the NASDAQ rose 86%. Last month, the gap between the two reached 30 percentage points, the highest since the internet bubble. According to media analysis, such a large gap often heralds the arrival of a turning point.

What companies make up the Dow?

The Dow includes 30 of the most influential and industry-representative US companies, but it is often thought of as representing companies that were viewed as great in the past, while the S&P 500 is dominated by companies currently considered leaders. In other words, the Dow represents the “old economy,” while the S&P 500 represents the “new economy.”

The Dow is one of the few “price-weighted” stock indices in the world. Giants such as Nvidia and Google may not have been included by the Dow because their stock prices are too high. In the US stock market, this is a “fatal weakness” for the Dow, but when the market changes, weaknesses may also become advantages, and become safe havens for investors to avoid valuation bubbles.

For example, during the Internet bubble, Cisco's stock price more than tripled in a year, becoming the third-largest company at the time, but failed to enter the Dow. However, when the bubble burst, Cisco's stock fell 89%.

According to the Futubull Niu App, the constituent stocks of the Dow include the following 30 companies, of which$American Express (AXP.US)$The year-to-date increase is over 30%, ranking first in the list;$Walmart (WMT.US)$,$Goldman Sachs (GS.US)$,$JPMorgan (JPM.US)$,$Amazon (AMZN.US)$,$Caterpillar (CAT.US)$,$Merck & Co (MRK.US)$Other companies increased by more than 20%.

In addition to constituent stocks, what other related ETFs are worth watching?

The Dow Jones Industrial Average, one of the oldest stock market indicators in the US, has long been an important benchmark for measuring overall economic health. When the index is strong, it often indicates economic vitality and prosperity; conversely, its weakness may indicate economic decline or instability.

The Dow Jones Index not only highlights the stable profit performance of blue-chip companies, but also more closely maps the pulse of economic growth, so it is regarded as an indispensable barometer for insight into economic performance.

As early as 1993, Buffett began recommending index funds. This is the only type of investment that Buffett has publicly recommended. Buffett once said, “By regularly investing in index funds, an amateur investor who doesn't understand anything can often beat most professional investors.”

Therefore, investors can also keep an eye out for Dow related ETFs. Among them, the most famous and only Dow ETF is owned by State Street Bank$SPDR Dow Jones Industrial Average Trust (DIA.US)$Since its listing in January 1998, DIA has been widely popular in the market and has become one of the most representative US stock ETFs.

For investors who don't want to be swayed by individual companies whose stock prices rise sharply, the Dow's equivalent equivalent$First Trust Dow 30 Equal Weight Etf (EDOW.US)$It provides an ideal investment option. By distributing weights evenly, EDOW ensures that each constituent stock has a comparable influence in the index, providing investors with a more balanced investment portfolio.

Of course, the Dow also has corresponding inverse and leveraged ETFs, including$Proshares Ultra Dow30 (DDM.US)$,$ProShares UltraPro Dow30 ETF (UDOW.US)$,$Proshares Short Dow30 (DOG.US)$,$ProShares UltraShort Dow30 (DXD.US)$,$ProShares UltraPro Short Dow30 ETF (SDOW.US)$.

Of course, the higher the ratio, the greater the return on leverage, and the greater the corresponding risk, so investors need to pay attention to risk.

Furthermore, the trading volume of ETFs is positively correlated with the overall size of the fund. Choosing an ETF with active trading volume can reduce liquidity discount losses and tracking error losses.

There are many types of ETFs in US stocks, and the number is huge. How do you find and trade the ETF you want?

Niu friends can open the Futubull App and click Market>ETFYou can choose from a variety of ETFs. Select any ETF and click the trade button to place an order.

Editor/Somer