The Dow Jones Industrial Average has had a positive tailwind as the economy gradually reopens and companies grow earnings. However, they do face some headwinds as the coronavirus cases remain stubbornly high and inflationary pressures persist. Given these factors, it could be worth betting on Dow stocks Johnson & Johnson (JNJ) and Cisco (CSCO) while NIKE (NKE) and The Boeing Company (NYSE:BA) are best avoided for now.The Dow Jones Industrial Average (DJIA) has performed solidly over the past few months, hitting an all-time high of 35,625.40 on August 16, 2021. With the fast-paced reopening of industrial activities, and favorable fiscal and monetary policies, the widely-watched benchmark index has gained 12.1% year-to-date and 24.3% over the past year.
However, along with the S&P 500 and the tech-heavy Nasdaq, DJIA tumbled yesterday as the consumer confidence slumped to a seven-month low, and Federal Reserve Chairman Jerome Powell expressed concerns over inflation. With a string of mixed economic reports, DJIA is expected to keep witnessing volatility in the upcoming months.
Given this backdrop, it could be wise to scoop up the shares of Dow Jones components Johnson & Johnson (JNJ) and Cisco Systems, Inc. (NASDAQ:CSCO) because of their above-average dividend yields and favorable valuations. And, it is better to avoid NIKE, Inc. (NKE) and The Boeing Company (BA) as they will likely face challenges due to supply chain issues.