RBC's Markets in Motion

• What The US Equity Market Has Been Thankful For

  The big things you need to know:First, several things that US equity markets have been linked to (breadth, bitcoin, private market fears, Fed cut expectations, consumer sentiment) have gotten better in recent updates.Second, a few signals from our year-ahead outlook analysis have shifted over the past week.Third, there have been a few interesting twists and turns in positioning since Thanksgiving week in terms of sectors and factors.

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• Our Year-Ahead US Equity Market Outlook

  The big things you need to know:First, our 12-month-forward price target for the S&P 500 is 7,750, approximately the median and average of five different models that we use, which focus on sentiment, valuation, the appeal of stocks relative to bonds, the economic outlook, and monetary policy.Second, some of the key headwinds / downside risks and tailwinds / upside risks we’re monitoring include shifts in expectations for the economic backdrop, renewed interest in geographical diversification, and the midterm elections.Third, tactically (near term) we are leaning into the rotation in leadership within the US equity market from Growth to Value and the mega cap Growth trade to the rest of the market, but caution that a shift in earnings dynamics is still needed for this transition to have significant duration.Fourth, we have gotten more comfortable adding to Small Caps but see risk that recent outperformance ends up being short-lived once again unless the underlying economic backdrop / overall economic conditions heat up significantly.

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• What We're Watching & What's Working

  The big things you need to know:First, with the S&P 500 having finally entered what we consider to be tier 1 / garden-variety-pullback territory on Thursday, we review what we’re watching to help us gauge if / when the pullback has run its course.Second, with old leadership within US equities under pressure, we review which trades are working best right now (or might be starting to work) among the data sets we track regularly (Small Caps – at least on Friday and Value, sectors with valuation appeal, and safer factors).Third, we review what we learned from the consumer companies that reported over the past week (companies highlight a mixed macro backdrop, ongoing and intense consumer challenges, ample inventories, their ability to manage through tariffs, and more specific AI use case examples).

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• Thoughts on Earnings, Small Caps, and the Shutdown

  The big things you need to know:First, earnings sentiment staged a partial comeback last week as the rate of upward EPS estimate revisions for the S&P 500 moved up again slightly vs. the prior week but remained below its August high.Second, we run through the latest big picture takeaways from S&P 500 earnings calls.Third, other things on our mind include our work the valuation profile of high earnings quality stocks within Small Cap and how we’re thinking about the government shutdown.

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• Latest Earnings Color, More Tricks Than Treats

  The big things you need to know:First, the percent of S&P 500 companies beating consensus EPS forecasts remains well above 2Q25 levels despite slipping a little last week. Meanwhile, the rate of upward EPS estimate revisions improved slightly but remains well below the high of the last reporting season.Second, macro commentary in last week’s S&P 500 earnings calls remained mixed and varied by sector, with the strongest tone coming out of Tech and Health Care and the weakest tone coming from Consumer.Third, we noticed more tricks than treats as we ran through our latest updates over Halloween weekend, and run through some of the charts that are spooking us the most on the broader market right now.

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