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Investing.com -- RBC Capital analysts highlighted three significant trends currently shaping markets in a note to clients on Monday.
The firm noted that the trends include an improving 2026 EPS outlook, a sharp increase in net bulls on the AAII survey, and emerging seasonal patterns.
First, "consensus expectations for 2026 are inching up for S&P 500 EPS in a broad-based way," said the bank.
This is seen as a "positive data point for the stock market but a slight one." RBC explains that the embedded growth rate for the S&P 500 in 2026 consensus estimates has risen modestly, and this improvement has been "fairly broad-based," impacting both the "Mag 7 as well as the index ex the Mag 7."
RBC Capital views this as a "positive data point for the broader U.S. equity market."
Second, investor sentiment, as measured by the AAII survey, has shifted. "Net bulls on the AAII survey have moved up sharply, and formally entered a less robust forward return environment."
While not yet negative, "the sentiment set up for the stock market is far less favorable than just a few weeks ago."
Other sentiment indicators also show "some signs of a stall," including correlations within the S&P 500 inching up again and U.S. equity funds experiencing "very modest outflows."
Third, seasonal trends suggest a tricky period ahead. RBC Capital says that "in recent years June and July have tended to be strong for the S&P 500 but that the transition into fall has been tricky with declines often seen in the August – October time frame."
This keeps them "mindful that even if stocks continue to climb in the near-term, the transition into the latter part of the year is often tricky."
They also note that the rebound off the April 8 low in the S&P 500 "continues to track the path of the rebounds off the major post GFC non-recession drawdowns," suggesting more room for recovery through year-end, albeit with potential choppiness.