RBC's Markets in Motion

Midterms On Our Mind

The big things you need to know: First, we took a look back at equity market and sector performance in 2H18 and 2H22, around the last two midterm elections. Conditions were choppy with two distinct drawdowns interrupted by a meaningful rally. Consumer Staples and Health Care outperformed during the drawdowns while Financials, Industrials, and Materials outperformed in the rebounds. Second, other things that jump out in our updates this week include shifts we’re seeing in our factor work, descriptions of a cautious consumer in our earnings call transcript analysis, the tendency of the stock market to perform well when IPO activity is ramping up, and what we see as reasonable valuations across the major indices in the US.

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The Lowdown From Down Under

The big things you need to know: First, takeaways from last week’s meetings with Australia-based investors, in which our conversations focused on inflation / interest rates / the Fed, the US midterm elections, and the rotation trade. Second, key big-picture themes in last week’s S&P 500 earnings calls included a cautiously optimistic tone among companies, consumer descriptions that seemed a little more complicated than usual, a renewed conversation on Iran war impacts, heightened attention to inflation pressures, and increasingly specific commentary from non-Tech companies about AI impacts. Third, other things that jump out in our weekly updates include the recent spike in gold prices (which has occurred alongside a drop in presidential approval), recent improvements in the 2Q26 S&P 500 EPS growth rate (which now appears to be the peak), and recent developments in sector funds flows (where Consumer flows have turned positive and Tech flows have stayed positive, among other trends).

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Valuation Opportunities Unlocking, Fed Transitions Can Be Tough For Stocks

The big things you need to know: First, valuation opportunity is opening up in the US equity market from a variety of perspectives. Second, in the aftermath of Wednesday’s Fed meeting, we highlight how the stock market tends to experience choppy performance in the first few months under a new Fed Chair. Third, other things that jump out in our updates this week include the return of high EPS quality outperformance as a factor in both the S&P 500 and Russell 2000, the modest uptick in stock market optimism in the Conference Board consumer survey that was out this week, and what we’re watching on the midterms (which we continue to see as a risk factor in the months ahead). Fourth, we’ve gone through our monthly refresh of the models that feed into our 12-month S&P 500 price target and are sticking with our 8,150 forecast, though we continue to believe that the path for stocks will not be a linear one.

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Muddy Waters

The big things you need to know: First, the stats for 2Q26 reporting season have continued to come in mixed, arguing for selectivity rather than a leadership rotation, in our view. Second, last week’s earnings commentary from S&P 500 companies reiterated the themes of resiliency and AI tailwinds, but didn’t give us much insight on how to think about recent war developments. Third, we review how we’re thinking about the role of the retail investor in today’s US equity market, which differs in some respects from the past, and how we’re monitoring risks on this front. Fourth, other things that jump out in our updates this week include the return of S&P 500 Semi & Semi Equipment valuations to average levels and the bright spots we’re seeing in our quant work on Japan.

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Mixed EPS Stats, Cautiously Optimistic Commentary

The big things you need to know: The big things you need to know: First, the early stats from 2Q26 reporting season look a little mixed as reporting season kicks into high gear. Second, early earnings commentary from the companies that reported over the past week highlights a cautiously optimistic tone, consumer resiliency, and complicated AI impacts. Third, other things that jumped out in our latest updates include further evidence of stabilizing sentiment on the NFIB and University of Michigan consumer sentiment surveys (which have encouraged the rotation trade) and evidence of weaker flows to US equities (which point to the possibility of some geographical pressure on the US equity market).

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S&P 500 Sector Recommendation Shuffle

The big things you need to know: First, we are making several changes to our S&P 500 sector views with upgrades to Tech to overweight and Consumer Discretionary to market weight, alongside downgrades of Communication Services to market weight and Utilities to underweight. Second, the expected growth rate for 2Q26 S&P 500 EPS has continued to drift up ahead of reporting season, but trends in beat rates and EPS revisions have been mixed. Third, on our broader outlook we’re on guard for a shift back into US and mega cap Growth leadership.

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June Survey Results Reveal Optimism, Not Euphoria, Heading Into 2H26

The big things you need to know: First, across the globe our analysts are constructive on performance over the next 6-12 months and see attractive valuations in the industries they cover. Second, Europe and Canada captured the most optimistic performance outlooks among our four coverage regions, but the US was not far behind. Third, our Canadian and US analysts expressed a favorable view of their own respective domestic policy backdrops. On the US midterm elections, our US analysts had a slightly constructive tilt on performance in a Republican sweep scenario, a slightly negative tilt on performance in a Democratic sweep scenario, and a neutral view on performance in a split Congress scenario. Fourth, at the global sector level, performance outlooks were mostly positive and came in stronger than other sectors for Materials and Industrials, but only by a little.

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Mid-Year Outlook Update

The big things you need to know: First, we are lifting our 12-month S&P 500 price target to 8,150 from 7,900. We also think the recent outperformance of non-US developed markets and value could last a bit longer but ultimately expect equity market leadership to return to the US and big cap growth after the recent valuation problem is resolved. Second, we run through our thoughts on the upcoming reporting season, noting that the bar seems high from a data perspective. Third, the latest Duke CFO survey pointed to a slight downtick on economic optimism but a slight uptick on optimism on the outlook for one’s own company.

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Down the Valuation Rabbit Hole

Two big things you need to know: First, forward P/Es have generally been de-frothed, but haven’t looked deeply compelling for the major US indices. Second, the valuation case for the broadening trade still has some room (Small Caps, certain cyclical sectors, non-US developed market equities), but requires close monitoring.

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The Time is Now – We Need Your Help

It’s been a year, and it’s only June. We built a framework to help investors navigate the fear and stuck with our constructive longer-term view. If you’ve found our research, and this podcast, helpful, we’d appreciate your vote in the Extel (formerly II) All America Research survey. Voting is open and closes this Friday, June 12th – please cast your vote now. Here is a one-minute video explaining why we think we’ve earned it this year. To vote go to: https://www.extelinsights.com/support/voting-help All-America Research Macro Portfolio Strategy RBC Lori Calvasina 5 stars Every vote counts! This category has a number of excellent strategists, and the rankings among the top 10 can be very tight. Please participate if you consume strategy work. If you already voted for us – thank you for your support!

From Rotation to Derisking

The big things you need to know: First, lingering concerns about interest rates and the Fed flared up on Friday after a surprisingly strong NFP report. We run through our thoughts on why this hit the Nasdaq so hard and note that risk of a tier 1 / garden variety pullback (5-10% from peak) has risen in the near term. Second, other things that jump out include the recent drop in bitcoin, which supports the idea that risks of a tier 1 pullback have risen, and the sharp drop in Small Caps on Friday on interest rate fears.

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Investment strategy through the ‘up crash’ and beyond

RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. This is a special edition of the podcast recorded live from the RBC Global Energy Power and Infrastructure Conference in New York on June 3rd, 2026. Lori teamed up with Callie Simpkins (Managing Director on RBCCM’s Cross Asset Hedge Fund sales team who moderated the discussion) and Amy Wu Silverman (Managing Director and Head of Derivatives Strategy) to discuss the outlook for the US equity market and other key macro issues including inflation. Two big things you need to know: First, Lori and Amy review how the US equity market rally seems late innings in some respects, but is not making clear signs of a top and why there could still be room to run. Second, they emphasize inflation as a key risk factor, and how it factors into the equity market outlook and positioning.

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Earnings Sentiment Broadens Out

The big things you need to know: First, earnings sentiment (the rate of upward EPS estimate revisions) is now improving broadly within the equity market, which we think opens the door for a short-term pause in mega cap Growth leadership within the US and US leadership within global developed markets equities. Second, the Growth/Value trade within Large Cap has turned choppy again, which we think may reflect the broadening out of improving earnings sentiment and valuations that have started to look frothy for mega cap Growth on some metrics. Third, stock market optimism improved in the latest Conference Board survey, a bright spot in the consumer narrative and a data point that alleviates some of our near-term pullback concerns.

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Everything in Moderation

The big things you need to know: First, we think the recent pick up in 10-year yields raises the risk of a tier 1 (5-10%) pullback in the S&P 500 in the short-term, but does not alter our longer-term constructive view on the S&P 500. Second, it was business as usual at the RBC Health Care conference last week in terms of company commentary. Third, other things that jump out from our latest updates include a move up in the median NTM P/E for the biggest market cap names in the S&P 500 (which also adds to risk of a near-term pullback).

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London Fog

The big things you need to know: First, the investors we met with this past week, in our trip to London and Switzerland, were keen to explore other opportunities in US equities beyond Semis/Tech/AI, but had difficulty envisioning what those were. Second, we highlight continued outperformance of high price momentum in our factor work and what we’re seeing in our valuation work for this part of the market, a pick up in the rate of upward EPS estimate revisions for the S&P 500 as reporting season slows down, and the signal we’re currently getting from S&P 500 and Russell 2000 forward P/Es – things are moving up but aren’t universally back to their 2025 and early 2026 highs.

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Positivity Isn’t Always Naivete

In this special cross over edition (originally recorded for the RBC Capital Markets Macro Minutes podcast), Lori joins Blake Gwinn, Head of RBC Capital Markets US Rates Strategy in a conversation on US equities, US rates, and the Fed. What we discuss: Equity markets keep hitting all-time highs. Rates markets are telling a more cautious story. So which one has it right? In this episode, we examine the complacency narrative through both an equity and rates lens, unpacking whether risk assets are fully pricing the range of Iran conflict outcomes or looking past risks that haven't fully materialized yet. We also dig into what a Warsh-led Fed means for forward guidance, dissent, and market volatility, and what the shifting policy backdrop means for how investors position across equities and rates.

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Baking in a Two-Speed Economy & EPS Backdrop into Our S&P 500 Forecast

The big things you need to know: First, we have lifted our 12-month-forward S&P 500 price target to 7,900, which represents a 7.7% gain from the May 7th close. In adjusting our forecast, we are focusing on our valuation/EPS model, which does the best job of baking in a two-speed economy and earnings backdrop. Second, on bigger-picture positioning, we continue to prefer Growth over Value, US over non-US, and like Small Caps (but not as much as Large Cap Growth). Our sector views are mostly unchanged, but we have lowered Health Care to market weight from overweight. Third, we run through the strong stats from 1Q26 reporting season.

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Taking The Stock Market’s Temperature, Takeaways from an Avalanche of Earnings

The big things you need to know: First, US equity market valuations are on the rise, but don’t look topped out yet. We remain constructive on the US equity market in the year ahead, recognizing that the path may not be linear. Second, last week’s earnings reports continued to point to resilient outlooks with a dose of caution fueled by a strong start to the year, highlighted challenges to consumer resiliency in restaurants and travel but otherwise a reiteration of the cautious but stable theme, and alluded to a complex web of buffers in place for companies regarding the impact of the war in Iran for a period of time. Third, things that jump out in our other updates include a sharp spike in company references to geopolitics in April, a stall in investor sentiment last week, and a pick-up in betting market expectations for a split Congress in the midterms.

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Resilience With a Dose of Caution

The big things you need to know: First, the three things that stuck out to us in our review of earnings calls last week included outlooks that emphasized resiliency but contained a dose of caution, the conversation on Iran war impacts (present and future) getting underway, and descriptions of cautious but stable consumers. Second, with US equities breaking out to a new 2026 high relative to non-US equities, we note that valuations suggest there’s room for this trade to run and that weak earnings revisions breadth is not a problem unique to the US. Third, funds flows are shifting back to Financials and Growth, which we think makes sense from a valuation and earnings growth perspective.

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April 2026 Global Analyst Survey Results - Constructive, Aside From The War

The big things you need to know: First, our analysts were generally constructive aside from the war. Second, our survey results reiterate the idea that the US is seen as a safety trade due to greater war resiliency, and that Europe does not necessarily present as a better alternative despite the potential for the US to lag if/when war fog clears. Third, we review the most interesting sector tidbits from the survey.

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