The Schwab US Dividend Equity ETF (SCHD) has done well this year as it jumped by 12% and reached a record high. It was trading at $31 on Monday, a few points below the record high of $31.6. This article explores some of the top catalysts for the SCHD stock this week.
SCHD stock to react to earnings dump
The SCHD ETF has soared this year, helped by the rotation from growth to value, with some of the top growth companies like NVIDIA and Palantir being under pressure.
The stock is also adjusting to the recent tweaks that removed some companies and replaced it with other top names like Accenture, UnitedHealth, Comcast, Blackstone, and Devon Energy.
Looking ahead, the fund will be in the spotlight this week as hundreds of companies, including those in its portfolio, publish their earnings. Some of those that will release their numbers are companies like Blackstone and UnitedHealth.
These results will provide more color about their business, especially now that the US is engaged in a major war in Iran.
This war has benefited some of the top companies in the fund. For example, most companies in the fund are in the energy sector and are benefiting from the recent crude oil price surge.
Analysts are optimistic about the earnings season, with the average estimate among analysts being that the earnings growth will be over 13%. If this view is correct, it will be the sixth quarter of double-digit earnings growth in the US. Strong earnings will be bullish for the SCHD ETF this week.
Potential US-Iran ceasefire extension
The other main catalyst for the SCHD ETF is the happenings in the Middle East, where a team led by JD Vance will meet its Iranian counterparts.
These two sides aim to reach an agreement that will end the war, with Trump noting that he wants a deal that will be better than the JCPOA, which Obama negotiated.
One potential outcome of this week’s meeting is the extension of the ceasefire that ends on Wednesday. Trump may frame the new ceasefire as a way to continue negotiations.
The challenge, however, is that Iran has not expressed enthusiasm about the new meetings, especially now that Trump has maintained his naval blockade.
A deal will be bullish for the SCHD ETF and the broader US stock market as it will raise the possibility that crude oil prices will drop, leading to lower inflation, and pushing the Federal Reserve to cut interest rates.
Kevin Warsh grilling in the Senate
The other main catalyst for SCHD and other US ETFs and indices is the upcoming grilling of Kevin Warsh in the Senate Banking Committee.
This will be the first time that Warsh receives questions from senators about his plans for the Federal Reserve, especially now that it has come under pressure from the US president.
Donald Trump has maintained his pressure in the past few months as he pushed Jerome Powell and the team to cut interest rates. He attempted to fire Lisa Cook while Judge Jeanine Pirro has sued Jerome Powell for the ongoing renovations at the bank.
Warsh will likely share his goals in the Federal Reserve, including on its independence and deregulation policies. A dovish tone will be bullish for the stock market.
However, Warsh has a long way to go to become the next Fed Chair. For example, he will need to overcome a blockade set by Senator Thom Tillis, who has said that he will block a full vote until the Powell lawsuit ends.
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