RBC Projects Higher Expectations for S&P 500

RBC Capital Markets has raised its year-end target for the S&P 500 index to 6,250, up from 5,730. This marks the second increase of 2025, reflecting growing investor optimism about the trajectory of the U.S. economy in 2026.

Despite recent volatility following President Trump’s announcement of a 50% tariff on Brazil and renewed trade uncertainties with the European Union, the S&P 500 index remains up 6.4% year-to-date, showing resilience even amid pressures.

Reasons Behind the Upgrade

RBC analysts updated their projections to encompass how equities perform during moderate GDP growth periods defined between 1.1% and 2%. This optimistic view aligns with sentiments from other Wall Street heavyweights such as BofA Global Research and Goldman Sachs, which also raised their forecasts recently.

RBC’s EPS expectations for the S&P 500 remain unchanged at $258, slightly below consensus estimates. Analysts noted the need for caution regarding potential impacts of higher tariffs on upcoming earnings, particularly as Q2 reports begin to unfold.

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Investor Sentiment is Shifting

RBC has observed a quicker-than-expected rebound in sentiment, as investors demonstrate a willingness to factor in long-term stability of earnings rather than short-term disruptions.

What Investors Should Watch For

While optimism regarding 2026 continues to spread, markets are still anticipating risks from:

• Escalating tariff pressures on essential trading partners.

• Potential spikes in consumer price indices (CPI).

• Corporate guidance concerning macroeconomic shifts.

Nonetheless, RBC’s adjustments indicate a growing belief that U.S. equities can navigate challenges in the near future, particularly if GDP growth remains stable and earnings hold up.