RBC Capital Markets has adjusted its forecast for the S&P 500, expecting stronger-than-anticipated corporate profits to sustain the index at a higher level through the end of the year. In a recent note, Lori Calvasina, the firm’s head of U.S. equity strategy, raised the year-end target for the S&P 500 to 6,350, an increase from the previous forecast of 6,250. Notably, this new target remains approximately 4% below the current trading levels of the benchmark stock index.
The upward revision primarily stems from an increase in Calvasina’s full-year 2025 earnings estimate for the S&P 500, which was adjusted from $258 to $269. Despite this optimism, Calvasina has expressed caution about the near-term outlook. She noted in her report that, although there is a slight increase in the 2025 price target, choppy market conditions are anticipated in U.S. equities leading up to the end of 2025.
“Although we are nudging our 2025 price target up a little, we do remain on guard for choppy conditions in U.S. equities between now and year-end 2025,” Calvasina stated. She highlighted ongoing concerns related to historical poor seasonal patterns in September and October, as well as stalled valuations among major index components, particularly within high market capitalization stocks like the top 10 in the S&P 500 and the Nasdaq-100, which have faced challenges in breaking through previous highs.
For the second half of 2026, Calvasina has set an ambitious price target of approximately 7,100 for the S&P 500. However, she cautioned investors about the potential for market volatility, referencing a significant decline in net bullish sentiment observed in recent polls conducted by the American Association of Individual Investors. This dip in confidence has historically served as a leading indicator for short-term declines in the stock market.
Additionally, there are indicators of investor fatigue, particularly among retail investors who have played a crucial role in supporting equity markets throughout the year. Calvasina pointed out mounting concerns that the market may be “priced for perfection,” particularly amid increasing uncertainty regarding the fundamental economic landscape, which is being influenced by various factors.
“The real test for U.S. corporate profitability, inflation, cost pressures, and demand is approaching in the third and fourth quarters,” she emphasized. Recent data releases from both government and private sectors have also raised questions about labor market strength, adding another layer of complexity to the current bullish narrative in the equities market.
