Welcome to RBC’s Markets in Motion podcast, recorded January 23rd, 2026. I’m Lori Calvasina, head of US equity strategy at RBC Capital Markets. Please listen to the end of this podcast for important disclaimers.

The big things you need to know: First, the various earnings stats we track point to a sleepy start to reporting season, suggesting to us that geopolitics hasn’t been the only thing contributing to the US equity market’s recent gyrations. These stats also highlight how the mega cap growth trade has seen its dominance on the earnings front erode in some ways, helping fuel the rotation trade to Value and Small Caps. Second, our review of this past week’s earnings call commentary suggests that views of the macro have been mixed, with geopolitical concerns and consumer pressures noted, but tariffs described as manageable. Third, things that jump out from our other updates include the rise in the Russell 2000’s P/Es which are approaching 2024 highs.

If you’d like to hear more, here’s another five minutes.

Starting with Takeaway #1: A Sleepy Start to Earnings on the Stats

One of our team members summed it up best, in our view, when he described earnings as a bit of a “snooze” so far. With just 30 companies reporting this week in the S&P 500, following the 14 that came out last week, the rollout of 4Q25 results season has seemed a bit slow to get going, and geopolitics and other macro matters have dominated the spotlight. Given our view that price action in the S&P 500 this year will likely be anchored to the earnings backdrop, we have kept one eye on the geopolitical headlines and another on the evolving earnings stats and the transcript commentary. Here’s what jumps out to us so far on the stats:

• To begin with, the consensus has come in very slightly: A few weeks ago, the bottom-up consensus 2026 EPS growth forecast tracked by Bloomberg had drifted slightly above $313. Though the latest stat still rounds to $313, one thing that caught our eye is that this stat has now drifted slightly below $313.

• Moving on, big cap beats aren’t beating. The percent of companies beating consensus EPS forecasts so far is tracking at 81% for the S&P 500 – similar to where the last reporting season ended up (82%).

• The Russell 2000 is off to a better start, with the percent of companies in the index beating consensus tracking at 69% – below the S&P 500 level but, importantly, up from 66% in the last quarter.

• Additionally, earnings enthusiasm has been lacking. One of the biggest things that jumped out to us in this week’s statistical updates is that the rate of upward EPS estimate revisions has continued to deteriorate from the peak put in place last fall. In our latest update, the rate of upward EPS estimate revisions for the S&P 500 has fallen to 51%, suggesting that upward and downward revisions are fairly balanced. This is far weaker than the 65.5% upward revision rate we saw for the index back in early September. Russell 2000 has been similarly weak, at 50.5%, but the good news for this corner of the US equity market is that the S&P 500 is seeing its dominance on this stat erode relative to the Russell 2000.

• Within the S&P 500 the rate of upward EPS estimate revisions has deteriorated for both the top-10 market cap names and the rest of the index, still well within positive territory in the former and close to balanced in the latter. The good news for the rotation trade has been (similar to what we are seeing in Small Cap), that the biggest market cap names are seeing their advantage on this metric erode relative to the rest of the index.

• After the first week of reporting season, when the big banks reported mixed results, we observed that the commentary overall still supported a cautiously optimistic view on the year ahead. We stand by that comment but think it’s fair to say that the caution is taking a toll on the numbers.

Moving on to Takeaway #2: What We Read Last Week Indicates That Macro Views Have Been Mixed

As usual, our team combed through S&P 500 earnings call transcripts this past week, looking for breadcrumbs on the macro backdrop and other commentary on key themes in the equity community. Here are our general impressions of what we read:

• Overall, the description of the macro backdrop from the companies that reported this past week came across as mixed, similar to the cautiously optimistic tone we head from the big banks in week 1. Geopolitics and uncertainties emanating from trade, tariffs, and conflicts were also noted by companies in multiple industries this past week, also similar to the prior week. On the more positive side, strength in copper prices emanating in part from the tailwinds of electrification and datacenters was highlighted. Several REITs/Financials noted improving customer sentiment and stable consumers last week..

• In the consumer conversations, value-consciousness, affordability concerns, and an ongoing desire to stretch budgets were noted, similar to what we’ve read in past weeks and quarters. The prior week, some of the banks noted their consumer stats all still looked good.

• As was the case in week 1 when the big banks reported, the conversation around AI use cases and impacts continued to be lighter and less specific than we’d been hoping for as 4Q25 reporting season got underway. Most of the companies that offered comments emphasized their investments and highlighted positive impacts on customer experience, employee productivity, and customer analytics along with more efficient technology engineering.

• Tariff comments indicated how the situation is still evolving and that current law is what’s embedded in guidance. Ongoing mitigation efforts stayed in focus. Several companies noted that their customers have adapted to tariffs but that it is treated as more a “planning assumption rather than an impediment” while another noted that companies have gotten “comfortable” with tariffs Several companies emphasized their own targeted or surgical approaches to pricing.

• In terms of other policy topics, one Health Care company noted they did not expect adverse impacts from the loss of ACA subsidies, while another noted they hadn’t seen evidence of impact either way. Meanwhile, one Homebuilder noted they were pleased that the Administration had acknowledged housing affordability as being an issue. An oil company expressed optimism about the opportunity in Venezuela. One Financial noted that the positive impacts from last year’s tax bill had not yet been realized for consumers. For the most part, companies that commented on policy issues emphasized the positive aspects or manageability of them. The topic of an interest rate cap on credit cards remained a key exception with one Financial company explaining why they believed such a measure would reduce the availability of credit and impair the economy. This was similar to commentary we read the previous week from other Financial companies.

And wrapping up with Takeaway #3: What Else Jumps Out in Our Latest Updates

• After strong start to the year for the rotation trade, the main thing jumping out on our stats are some of the shifts we’re seeing in P/E multiples. We continue to track forward NTM P/Es for the S&P 500, its top-10 market cap names, and the rest of the index. Generally, we have seen a bit of slippage, but multiples remain elevated.

• Small Caps are a different story, however, as the Russell 2000’s P/E on both an FY2 and NTM basis continue to rise. The Russell 2000 P/E is back to its 2024 high on NTM (19x) …

• and is getting close to it on FY2 (17.9x vs. 18.1x). This represents another pivotal test for the Russell 2000, which still has considerable room to run, in our view, if it embarks on a return to all-time highs.

That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.