Welcome to RBC’s Markets in Motion podcast, recorded November 3rd, 2025. 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 percent of S&P 500 companies beating consensus EPS forecasts remains well above 2Q25 levels despite slipping a little last week. Meanwhile, the rate of upward EPS estimate revisions improved improved slightly but remains well below the high of the last reporting season. Second, macro commentary in last week’s S&P 500 earnings calls remained mixed and varied by sector, with the strongest tone coming out of Tech and Health Care and the weakest tone coming from Consumer. Third, we noticed more tricks than treats as we ran through our latest updates over Halloween weekend, and run through some of the charts that are spooking us the most on the broader market right now.

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

Starting with Takeaway #1: The Latest Stats for 3Q25 Reporting Season

• Reporting season remains strong from the perspective of beat rates. Through Wednesday, 81% of S&P 500 companies were beating consensus on EPS while 76% were beating on sales. Both stats are down slightly since our prior update. EPS beats remain slightly above final levels in place for 2Q25, but sales beats are now tracking slightly below 2Q25 levels.

• The rate of upward EPS estimate revisions for the broader market indices improved last week, but remains well below their August peak. This is a gauge of earnings sentiment and is more of a forward-looking indicator than beat rates. This stat is now tracking at 55.8% (up from 51.9% last week) for the S&P 500. In August, this stat was in the mid-60s.

• The rate of upward EPS revisions continued to decelerate for the top 10 market cap names in the S&P 500. The stabilization in EPS revisions occurred in the other 490 names in the index. These stats were captured before most of the widely followed “Mag 7” names reported last week, and it will be important to see how they look in our next update. For now, it’s worth noting that the biggest market cap names within the S&P 500 had lost some luster on this stat relative to the rest of the index, a concerning development as it’s been the mega cap growth cohort that has enabled the US equity market’s move up to near highs.

Moving on to Takeaway #2: Macro Color from Last Week’s Earnings Calls

• Overall, we’d characterize what we read about the overall macro in last week’s earnings calls as mixed and varying in tone by sector. On the more positive side, we read about strong/strengthening/healthy demand from a number of companies, with much of the positive commentary coming from Technology, some parts of Communication Services, and Health Care. Less constructive comments tended to come from Consumer.

• With more Consumer companies reporting and fewer Financials in the queue last week, the tone around the consumer was a notch below what we read in the first few weeks of 3Q25 reporting season, when the conversation about the consumer was driven mostly by Banks. The Consumer-related companies that reported last week continued to describe a price-sensitive and value-conscious consumer with a preference for experiences. Several highlighted how the consumer was “under pressure” with one company noting “we don't really see, candidly, a catalyst for that to change any time in the near term.” More specifically, companies described worsening consumer sentiment, ongoing affordability challenges with housing, anticipated SNAP headwinds, shorter length of stays in travel, inventory pullback from corporate customers, the compounding impacts of inflation, weakness among Hispanic customers, student loan repayments, uncertainty regarding tariffs and AI, more couponing and an increased promotional environment, softness in September, softness around Halloween, lower demand for vehicle repairs, middle-income consumers being on the sidelines with Botox, and pressures on dining out among low- to middle-income customers and those in the 25-to-35 age cohort. One consumer-related quote that we’ll have a hard time forgetting highlighted how they were expanding inventory in salvage. Another quote that stuck out was a payments company highlighting macro-related deceleration in September and a trade-down in basket sizes.

• Overall, companies appeared to strike a balanced tone on tariffs, particularly in Industrials.

• Most companies that discussed the shutdown said they had baked in modest impacts into their guidance, indicated they were monitoring the situation, observed that it would not have a major impact, or said it was contributing to uncertainty. Generally, companies aren’t sounding the alarm on this issue, which we think will keep equity investors from getting too concerned about it for the time being.

• On AI, companies involved in the build out generally highlighted strong demand and increasing capex. Strength in the data center end market remained in focus. AI end-users did a better job of highlighting how AI was positively impacting their businesses. In the past, we’ve characterized company commentary on AI impact as “small potatoes.” We think it’s fair to say the potatoes have gotten a little bigger and cleaner, but still aren’t huge.

Wrapping up with Takeaway #3: We saw More Tricks & Treats in Our Other Updates This Week

• Here’s a quick rundown of some of the spookiest charts in our deck right now:

• The biggest market cap names are back to Tech bubble peaks on performance relative to the rest of the S&P 500.

• Another chart that’s spooking us in regard to the status of the biggest names in the S&P 500 is one that we track looking at both the market cap share of the top 10 market cap names and the net income share of this basket. Currently, this basket’s market cap share is more than 44% while it’s net income share is 34%. Market cap share has outpaced net income share since 2021, but the gap between them is almost back to its Tech bubble highs.

• Small Caps have given up their brief bout of leadership relative to the Nasdaq 100. We think the fizzle of Small Caps is highlighting how Fed cut optimism has taken a back seat to renewed AI enthusiasm as the main driver of the upward move in US equity markets.

• Through September, FINRA margin debt levels had climbed sharply and the growth rate on a month over month basis had eased back a bit.

• Meanwhile, net bulls in the AAII survey are nearly back to the highs that were seen on this metric over the summer and earlier this fall, though still well below all-time highs. Overall, what we’re seeing on these two sets of data is evidence of stretched sentiment, which could reverse at any time.

• We come to a similar conclusion when looking at the time series for those expecting stock prices to keep rising on the Conference Board Consumer Confidence survey – where the latest update shows levels of bullishness not quite back to the most recent, all-time high, but at or above levels that have more often than not marked the peak in optimism.

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