RBC's Markets in Motion

The big things you need to know:

• First, earnings sentiment has been fading for the broader US equity market and is at a critical juncture for the biggest market cap names and Tech sector within the S&P 500.
• Second, macro signals were mixed from the S&P 500 companies that reported over the past few weeks.
• Third, our thoughts on Friday’s weakness in the S&P 500.

The big things you need to know:

• First, across all industries and regions, our analysts are constructive on performance over the next 6-12 months.
• Second, at the global sector level our analysts have the most positive performance outlooks for REITs, Materials and Financials.
• Third, our analysts were slightly less optimistic on forward performance for Europe/UK than other regions.
• Fourth, our analysts generally had mixed views of the policy backdrop.
• Fifth, when we look at some of our macro indicators, Canada has been the bright spot in terms of performance YTD and over the past month.

The big things you need to know:

• First, many of the US equity investors we met with last week were frustrated and wary.
• Second, other things that jump out in our work include a speech by the USTR to the financial community in NYC last week, the recent fade in the broadening trade and Small Cap leadership, the continued easing in earnings sentiment, and expectations around the shutdown’s duration in betting markets.

The big things you need to know:

• First, we review what clients were most interested in talking about on our trip to the UK last week, which included differences between US and UK investor sentiment, valuations, geographical funds flows, and sectors.
• Second, we recap the macro tidbits we picked up from last week’s S&P 500 earnings calls (where the auto-related names had a negative tone), our takeaways from the Duke CFO survey that came out last week (optimism about their own companies moved up slightly), and what we learned from our review of how stocks have traded around government shutdowns in the past.

The big things you need to know:

• First, weakness in Homebuilders doesn’t bode well for the recent outperformance of Small Caps.

• Second, we’ve continued to see some slippage in earnings sentiment (the rate of upward EPS estimate revisions) for the S&P 500, which has been driven by companies outside of the biggest market cap names.

• Third, bulls picked up sharply in the AAII survey last week.

• Fourth, our work on US equity market performance in the 12-month period following non-recession-related Fed cuts and reset cuts highlights upside risk to our 2H26 S&P 500 target price of 7,100.

• Fifth, capex growth improved in 2Q25.

• Sixth, US equity funds flows bounced back last week, driven by US-domiciled funds.

The big thing you need to know:

• The big thing you need to know: We are introducing preliminary forecasts for the S&P 500 for 2026 of 7,100 (a 2H26 price target) and $297 (full-year 2026 S&P 500 EPS). We think they should be viewed as a very early indication of how our models are tracking at the moment.

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.

The big things you need to know:

• First, we see Friday’s weaker-than-expected jobs report as having added some additional uncertainty to the US equity market outlook at a time when we’ve been on guard for choppiness for other reasons.
• Second, we reiterate our overweight stance on the S&P 500 Materials sector.
• Third, other things that jump out to us include the weakness in bitcoin and the deterioration in US equity flows and retail flows specifically, which add to our near-term concerns.

The big things you need to know: First, 2Q earnings season wrapped up with downward pressure on 2026 sector EPS forecasts & Small Cap operating margin forecasts. Second, following Friday’s news that the US Court of Appeals for the Federal Circuit had ruled against the reciprocal tariffs, we think corporate uncertainty around tariffs will remain elevated.

The big things you need to know:

• First, a better longer-term EPS outlook and more resilient operating margin forecasts help explain the recent outperformance of mega cap growth stocks and growth-oriented sectors
• Second, Small Caps recently saw a brief/mild outperformance pop on mounting Fed cut optimism, but we remain neutral on Small Caps given elevated valuations and below-average consensus GDP expectations.
• Third, mixed vibes to end the summer make us question whether the sentiment recovery that has powered US stocks may soon hit a speed bump.

The big thing you need to know: First, with reporting season starting to wind down, Health Care and Tech stand out positively on a few of our earnings-related sector stats. Second, we recap what we read in last week’s S&P 500 earnings calls. The overall tone improved vs. the prior week, but we still detected plenty of uncertainty as reporting season winds down particularly on demand, the consumer, mitigation levers yet to be pulled, and capex. Third, we run through a few other things that jump out on our high frequency indicators including the surge in Growth stocks, waning investor sentiment, and the sharp US equity funds outflows seen in the latest EPFR data.