The Schwab US Dividend Equity ETF (SCHD) has staged a strong rally in the past few months, mirroring the performance of the broader stock market. After plunging to a low of $23.63 in April, the stock has rebounded by over 15%, and is hovering at its highest level since April 2.
Why the SCHD ETF stock has jumped
The Schwab US Dividend Equity ETF stock has rebounded in the past few months because of the rising stock market following Donald Trump’s Liberation Day speech in April. He unveiled sweeping tariffs on imported goods from all countries to the United States.
SCHD and other benchmark indices like the S&P 500 and Nasdaq 100 have all bounced back and moved to their all-time highs.
This performance mirrors what happens when a major black swan event occurs. For example, the stock market crashed in March 2020 after the COVID-19 illness was declared a global pandemic and then bounced back.
Most recently, the stock market dropped after Moody’s downgraded the US credit rating and then rallied back.
The SCHD ETF also rallied after Trump announced a 90-day pause to allow for negotiations with other countries. The US has already reached agreements with countries like China and the UK.
The fund and the broader market will likely perform well now that Trump has extended the implementation date of the tariffs to the end of the month. This is a sign that Trump wants to make a deal.
End of the 12-day Iran-Israel war
The SCHD ETF has also jumped following the end of the 12-day war between Iran and Israel. It ended after the US attacked key Iranian nuclear sites. Instead of escalation, Iran launched muted attacks on a US base in Qatar.
A wider war in the region would have been bad for the US stock market because of its impact on the energy market. Indeed, Brent and WTI crude oil prices rose to $80 as the war escalate and then nosedived.
Higher crude oil prices would have made inflation stickier in the US, complicating the Federal Reserve interest rate hopes.
Further, the war would have led to higher shipping costs and supply chain issues, which would have affected companies in the SCHD ETF.
Looking ahead, the next key catalyst for the SCHD ETF is the upcoming earnings season, which starts next week. Some of the top companies that will publish their earnings are Goldman Sachs, JPMorgan, BlackRock, and Citigroup.
Analysts anticipate that the earnings season will be the worst since 2023. However, the slow earnings growth may also be a sign of a bottom, which could point to more gains.
SCHD technical analysis
SCHD ETF stock | Source: TradingView
The daily chart indicates that the SCHD ETF stock price has rebounded over the past few months. It has jumped from a low of $23.63 in April to a high of $27.35 today.
The stock has moved above the key resistance level at $26.85, its highest point on June 13 this year. It is about to form a golden cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) are about to cross each other. This cross is one of the most bullish signs in the market.
Top oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. Therefore, the stock will likely keep rising as bulls target the key resistance level at $29.20, its highest point in November last year.
The post Here’s why the SCHD ETF stock has jumped and what next appeared first on Invezz