Image Source: UnsplashIronically, the period associated with ghouls and ghosts frequently coincides with a favorable time for Wall Street, courtesy of the Halloween Effect, which typically brings a positive glow to financial markets.In any case, the month of October turned out to be a little spooky for investors with the three key indices shedding in the range of 1.5% to 3.9% in the past month (as of Oct 30, 2023) hurt by the geopolitical crisis and rising rate worries. Notably, the Dow Jones lost the least.But as you start carving the pumpkin, glooms over Wall Street are believed to be passing away. Historically, investing in equities on All Hallow’s Eve — Oct 31 – earns investors solid long-term returns. At least research shows that.What is the Halloween Effect?Halloween Effect is a historically observed increase in stock prices from the month of November through the end of April. It is exactly opposite the popular adage “sell in May and then walk away,” which refers to the six months between May 1 and Oct 31.It is a seasonal anomaly, which is dissimilar to the buy-and-hold strategy, in which an investor has to go through down months. Vacations, holiday buying season (both Christmas and spring), and seasonal optimism probably contribute to this optimism.Is Dow Jones Ready to Experience the Halloween Effect?U.S. stocks rallied on Monday after huge selloffs last week. While all three key U.S. indices gained, the surge in the Dow Jones was the most notable. The oldest index of Wall Street advanced about 1.6% on Oct 30 and also added 0.01% after hours.It seems that the Dow Jones could rally further from here. Let’s find out the reasons for outperformance.Rising Bond Yields: A Tailwind for Dow JonesThe latest spike in U.S. long-term treasury bond yields helped the value-centric Dow Jones gain precedence over the growth-oriented Nasdaq. The benchmark U.S. treasury yield was 4.88% on Oct 30, 2023, up 4.69% seen at the start of the month.Since value stocks perform better in a rising rate environment than growth stocks, Dow Jones had every reason to stage a recovery ahead. A jump in the Fed’s preferred inflation metric has boosted expectations that policymakers will stick to their “higher for longer” stance.Steepening Yield Curve in the Cards?As recessionary fears are ebbing and the Fed is likely to stay put in November as evident from the CME Fed Watch Tool, a steepening of the yield curve is expected ahead. Consumers have been resilient ahead of all-important Holiday shopping season. A steepening yield curve is great for bank stocks as the pattern boosts banks’ net interest rate margins. Financials stocks take about 20% of the Dow Jones. This clearly explains why the key equity index is ready to see the Halloween Effect.Holdings Offer Upbeat OutlookThe Dow Jones ETFSPDR Dow Jones Industrial Average ETF Trust (DIA) puts about 10.66% weight in the largest U.S. health insurer UnitedHealth (UNH). In mid-October, the company reported better-than-expected third-quarter 2023 results. Earnings and revenues breezed past the Zacks Consensus Estimate. The company lifted the lower end of its full-year earnings guidance. UNH shares rose 3% past month.   The Dow Jones’ second holding is Microsoft (MSFT) (with 6.70% weight). Microsoft has come up with upbeat quarterly results this season. The tech behemoth has witnessed faster cloud growth and offered optimistic revenue forecast. The company’s Azure cloud revenue growth gained momentum after two years of deceleration. Revenue from Azure surged 29% during the quarter, higher than the 26% consensus among analysts that CNBC and StreetAccount polled.Relatively Cheaper ValuationCheaper valuation is another tailwind. At the current level, Dow Jones has a P/E of 16.82X, whereas the S&P 500 has a P/E of 17.86X and the Nasdaq-100 has a P/E of 22.70X. This was because the Dow Jones suffered a lot in the first half of 2023, which provided the index the scope to fare better in the second half.ETFs in FocusAgainst this backdrop, investors can bet on iShares Dow Jones U.S. ETF (IYY) and DIA. The ETF DIA has a Zacks Rank #1 (Strong Buy) while IYY has a Zacks Rank #2 (Buy).More By This Author:Bear Of The Day: Polaris Caterpillar Q3 Earnings And Revenues Top EstimatesPinterest Q3 Earnings Beat On Solid Revenue Growth