The Schwab US Dividend Equity ETF (SCHD) has remained in a tight range this month. SCHD was trading at $27 on Monday, a range it has maintained over the past few weeks, and over 15% above its lowest point this year. This article examines why this week is crucial for the SCHD ETF.
Federal Reserve interest rate decision
The first main catalyst for the SCHD ETF this week will be the upcoming Federal Reserve interest rate decision. Economists polled by Reuters and Bloomberg expect the Fed to maintain interest rates at 4.25% to 4.50%, where they have been throughout the year.
The main Federal Reserve decision will not necessarily move the SCHD and the broader stock market. Instead, the accompanying statement and Jerome Powell’s press conference will be the top catalyst.
Powell will likely hint at when the Fed will start cutting interest rates, a move that will support American equities. Analysts expect the bank to start cutting rates either in the September and October meetings.
Top US economic data ahead
The SCHD ETF will react to some important macroeconomic numbers expected this week. For example, the Conference Board will publish the latest consumer confidence report on Tuesday.
ADP will then release the private nonfarm payrolls jobs report, while the Bureau of Economic Analysis (BEA) will release the first estimate of the second quarter GDP data.
The US will then publish the latest US personal consumption expenditure (PCE) data on Thursday. PCE is an important report because it is the Federal Reserve’s favorite inflation gauge.
Most importantly, the US will publish the July nonfarm payrolls (NFP) data on Friday. Economists expect these numbers to show that the labor market strengthened in July as they defied expectations.
These numbers are highly important because they will have an impact on the Federal Reserve interest rate cuts.
Top corporate earnings
The SCHD ETF will be in the spotlight this week as many American companies publish their financial results. Magnificent 7 companies like Microsoft, Apple, Meta Platforms, and Amazon will publish their financial results.
While these companies are not SCHD constituents, they are among the largest companies globally. Combined, these companies are valued at over $11 trillion and are some of the most influential firms globally.
Other companies publishing their financial results this week include firms such as Visa, Mastercard, Waste Management, Chevron, and ExxonMobil. Over 50% of all companies in the S&P 500 Index will publish their earnings this week.
Trade deals
The other catalyst for the SCHD ETF this week will be potential trade deals between the US and other countries. The US has already reached a deal with the European Union and Japan, two of its top trading partners.
Its officials are also meeting in Sweden with the Chinese, hoping to enhance the recently announced trade deal. Some of the top countries to watch will be India, Brazil, and South Korea. More deals will be bullish for the SCHD ETF and the stock market.
SCHD ETF stock price analysis
The daily chart shows that the SCHD ETF stock has rebounded in the past few months. It has jumped from a low of $23.65 in April to $27.32.
The fund has formed an ascending channel and has formed a golden cross pattern as the 50-day and 200-day moving averages crossed each other. Therefore, the stock will likely keep rising as bulls target the all-time high of $28.90, up by 5.8% above the current level.
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