SCHD ETF has pulled back: is it safe to buy the dip now?

Core Viewpoint - The Schwab US Dividend Equity ETF (SCHD) has experienced a significant decline, reaching its lowest level since February 4, 2026, with a drop of 4.40% from its peak this year, but it may rebound in the future [1][8]. Market Performance - SCHD has mirrored the performance of other American stock indices, particularly following the onset of the US-Iran war, but is better positioned to withstand the ongoing crisis compared to the S&P 500 and Nasdaq 100 [2]. Sector Analysis - The energy sector constitutes 20% of SCHD, including companies like ConocoPhillips, Chevron, and EOG Resources, which have performed well due to rising crude oil and natural gas prices [3]. - The healthcare segment accounts for approximately 16.3% of the fund, featuring companies such as Bristol Myers Squibb, Merck, Amgen, and AbbVie, which are also less affected by the Iran war [4]. - The technology sector has a minimal presence in SCHD, which is under scrutiny due to concerns about a potential AI bubble [5]. Federal Reserve Impact - The SCHD ETF's decline is partly attributed to fears of a more hawkish Federal Reserve stance amid rising inflation, with expectations of at least two interest rate hikes this year [6]. - Historically, SCHD tends to outperform the broader market during periods of interest rate hikes due to its composition of value stocks [7]. Valuation Metrics - SCHD is considered relatively undervalued, with a price-to-earnings (PE) ratio of 19, lower than the S&P 500 average of 23, and a price-to-cash-flow ratio of 10, also below the broader market [9]. Technical Analysis - The ETF has seen a decline from a record high of $31.95 to $30.60, with the Relative Strength Index (RSI) dropping from 86 to 40, indicating a shift from overbought to oversold conditions [10]. - The stock is expected to remain under pressure but may rebound, potentially reaching a 23.6% retracement level at $29.85 before resuming an upward trend [11].