RBC Capital Markets identified slightly softer early U.S. earnings measures before the S&P 500 rose 0.4% on Oct. 19, drawing attention to a gap between reporting trends and share prices.
The bank recorded its assessment Oct. 16 and published it Oct. 19, before the market closed. RBC said a slightly smaller share of S&P 500 companies was beating earnings estimates than in the previous quarter. The pace of upward revisions to earnings forecasts had also slowed. Those measures do not establish that corporate earnings overall declined.
The S&P 500 closed at 7,690.73 on Oct. 19. AI and technology shares drove the advance while a majority of other U.S. stocks fell, The Associated Press reported. The index's gain therefore came alongside losses across much of the wider market.
RBC said company comments still indicated resilience in the economy and among consumers, with artificial intelligence providing support. The assessment came with caveats: the bank noted affordability pressures, weakness at the lower end of the market and one restaurant's report of smaller orders.
U.S. investors RBC met during the week of Oct. 12-16 appeared broadly neutral on stocks, though somewhat nervous and more focused on the near term than usual, the bank said. Those conversations preceded the Oct. 19 market gain.
RBC had shifted its sector ratings on Oct. 14, lowering technology from overweight to market weight and raising health care to overweight. RBC cited technology valuations and a slowdown in upgrades to semiconductor earnings forecasts in explaining its preference for health care over technology.
The bank also said the recent rise in high-yield credit spreads could weigh on small-cap shares. The spreads had returned to their March 2026 high, RBC said, but remained below levels reached during earlier periods of intense market stress.
