RBC's Markets in Motion

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.

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.

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.

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.

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!

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.

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.

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.

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).

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.