Bull Case Holds for 2026 – Lori Calvasina

The S&P 500 maintains a constructive outlook despite geopolitical tensions, as market participants increasingly look past short-term volatility. Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, emphasizes that recent market drawdowns, such as the 9.1% drop during the Iran conflict, align with rational behavior in the absence of a recession. Corporate earnings remain resilient, with a clear divergence between the "fast lane" of AI-related sectors and the "slow lane" of broader industries. While AI-driven growth continues to fuel large-cap performance, small-cap stocks show potential for a faster earnings recovery by 2027. Investors should prioritize long-term data over emotional reactions, as current valuation models and labor market stability suggest that the US market remains well-positioned to navigate ongoing macroeconomic and geopolitical uncertainties.