SP500 RBC Target Raised as Upside Turns Selective

 StocksRunner
 
  StocksRunner
 
Follow  Message
 
 
Find out what happening right now and get all the pieces of the puzzle on important data activity before the major news sources break the story and see what are the trends
 

•  29 Jun 2026
 

S&P 500 received a higher 12 month target from RBC, with the investment bank lifting its forecast to 8,150 points while warning that the path higher may be volatile. The index is trading around 7,400 points today after rising about 8% since the start of the year, and the new target implies about 11% upside from recent levels. RBC expects an aggregate earnings multiple of 24 for S&P 500 companies, making the call a valuation and earnings catalyst rather than a clean momentum signal.

The updated forecast follows a complex month for the US market. Technology and AI stocks declined, concerns about a September rate hike returned to the table, oil prices eased, inflation looked less threatening, and expectations for corporate profits continued to rise. RBC believes the index can keep climbing even if the move is less smooth and less clear than investors became used to in recent years. That keeps the focus on earnings momentum, institutional flows, and whether sentiment can improve without relying only on multiple expansion.

The bank model is based on forecast earnings of $337 per share over the four quarters ending in the first quarter of next year. At a target level of 8,150 points, that implies a multiple of about 24 times forecast earnings. That multiple is historically high, but it is one the market is currently willing to pay for a combination of earnings growth, AI, an economy that is still holding up, and sentiment that could improve. The higher earnings growth is, the higher the earnings multiple tends to be.

There are still risks, as seen last week with product price increases driven by chip shortages and concern that this could hurt demand and reduce sales volumes. RBC analysts see the Federal Reserve as the central risk. Interest rate futures price about a 64% probability of a September rate hike, in contrast with expectations locally for a 0.25% rate cut next week, and that scenario could weigh on growth stocks and companies trading at high multiples. Higher rates hurt growth in two ways: they reduce real growth through weaker demand, and they reduce the discounted value of future earnings, lowering the value of the business.

Even so, RBC believes that if recession fears remain low and rate hikes are moderate, declines along the way may amount to normal 5%-10% corrections rather than a meaningful market breakdown. For investors, the implication is that upside still exists, but it now depends more on earnings and less on multiple expansion, meaning a methodological shift in Wall Street valuations. The S&P 500 is on track for a fourth consecutive positive year, and RBCs higher target joins a wave of banks raising forecasts. Still, with the index trading around a high multiple and rates still threatening, the path to 8,150 points is not trivial.

View all market intelligence