Popular exchange-traded funds (ETFs) like the JPMorgan Equity Premium Income (JEPI), JPMorgan Nasdaq Equity Premium Income (JEPQ), and Schwab US Dividend Equity (SCHD) have rebounded in the past few weeks.
JEPI has jumped to $55, up by 12.35% from its lowest point in April, while JEPQ has soared by 18% to trade at $51.65. The SCHD ETF has risen to $25.75, also up by over 8% from its lowest level this year. Here are the top three catalysts that will move these ETFs this week.
US and China trade talks
The most important catalyst for these blue-chip ETFs is the US and China trade negotiations that started on Saturday. After two days of intense talks, Trump hailed the great progress made, while Scott Bessent noted that the team had covered a substantial groundwork.
China has also offered similar statements, while offering few details. Therefore, any news relating to the trade situation will move the US stock market, including popular dividend ETFs like JEPI, JEPQ, and SCHD.
Signs of progress will be welcomed as it will hint at potential tariff relief and better trade relations. However, as Bessent warned recently, the two sides have a lot going on and that an eventual trade deal will take a while longer to conclude. He estimated that the deal will likely take at least three years.
The US and China have largely imposed an embargo on each other, with each country adding triple-digit tariff rates. Chinese goods brought to the United States have a 145% tariff, while those flowing to China have a 124% tariff.
Other trade-related news events will have an impact on the SCHD, JEPI, and JEPQ. For example, the US has launched a probe into aircraft imports and is eying tariffs that would hit the industry.
US Consumer Price Index (CPI) data
The other top catalyst fo these ETFs will come out on Wednesday when the US publishes the latest consumer price index (CPI) data.
Economists expect these numbers to show that the headline Consumer Price Index (CPI) rose slightly in April as the impact of tariffs started to hit consumers. Recent data shows that some popular e-commerce companies like Shein, Temu, and Amazon have started to increase prices.
Analysts at Goldman Sachs believe that if the tariffs remain in place, inflation could surge up to almost 4% later this year.
Inflation is an important catalysts as it has an impact on the Federal Reserve, which left interest rates unchanged last week. Signs that inflation is falling, together with progress on trade, would raise the odds of interest rate cuts in the US, which will fuel their recovery.
Corporate earnings
The other top catalyst for the JEPQ, JEPI, and SCHD ETFs is the upcoming corporate earnings by top American companies. Some of the most notable ones are Walmart, Applied Materials, Cisco, and Deere.
Other global companies, such as Japan’s Mitsubishi, Softbank, and Sony, will have an impact on stocks.
However, the reality is that this earnings season has had limited impact on the stock market because it covered the first quarter when Trump’s tariffs were not in place. As such, while these companies are large and notable ones, their impact on the stock market will be limited.
Caution on the SCHD ETF
The SCHD ETF faces two potential risks this week. First, it remains below the 50-day Exponential Moving Average, a sign that the recovery remains shaky.
Second, it has formed a rising wedge pattern on the daily chart, pointing to a bearish breakout in the coming weeks. This pattern comprises of two ascending and converging trendlines. If this happens, the next point to watch will be at $24.50, down by 6% from the current level.
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