RBC: 49% IT Earnings Surge Powers S&P 500’s Wall-of-Worry Rally in 2026

For finance professionals navigating a market stretched between AI-driven earnings euphoria and macro uncertainty, RBC’s 2026 mid-year assessment provides critical benchmarks: a 49% IT profit surge and the S&P 500 climbing a wall of worry. This analysis frames the risk-reward calculus as midterm elections approach, demanding a focus on earnings quality and historical patterns that suggest heightened volatility.

The U.S. stock market continues to climb the wall of worry, bolstered by robust corporate earnings and a resilient economy, according to RBC Wealth Management’s Global Insight Mid-Year 2026 Outlook. Released on June 15, 2026, the report highlights that despite geopolitical tensions, elevated Treasury yields, and approaching midterm elections, the S&P 500 has rallied year-to-date through mid-June, with the Information Technology sector leading the charge. RBC’s Vice President and Portfolio Analyst Kelly Bogdanova noted that corporate earnings have been “the great stabilizer this year,” and the profit outlook for 2026 and 2027 has brightened considerably since January. This earnings strength, particularly a 49% year-over-year profit surge in the Information Technology sector during the first quarter, has provided a critical underpinning for the bull market’s persistence into its fourth year.

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For finance professionals navigating a market stretched between AI-driven earnings euphoria and macro uncertainty, RBC’s 2026 mid-year assessment provides critical benchmarks: a 49% IT profit surge and the S&P 500 climbing a wall of worry.

The outlook paints a picture of a market that has defied the typical headwinds. Fixed income yields testing multi-year highs and ongoing geopolitical uncertainty have not derailed investor confidence, thanks largely to the sheer force of corporate profitability. AI capital spending is a key driver, infusing upward momentum into consensus earnings forecasts across multiple sectors. RBC had identified several catalysts necessary for the bull market to continue, and the buoyant S&P 500 profit trajectory checks a major box. However, the firm cautions that risks remain. With the November 3 midterm elections on the horizon, RBC points to a historical pattern: since 1934, the S&P 500 has experienced an average 21% correction surrounding midterm election years. While the current environment differs in many respects, the potential for volatility—especially if Treasury yields keep rising or political angst intensifies—cannot be dismissed.

From a sectoral perspective, the Information Technology sector’s standout Q1 performance underscores the transformative role of artificial intelligence. The 49% profit growth was not merely a rebound but a structural shift driven by hyperscaler and enterprise AI investments. This trend is expected to support earnings across industrials, communication services, and even consumer discretionary as AI adoption broadens. RBC’s analysis suggests that the profit cycle has extended beyond the typical late-cycle behavior, offering a cushion against macro headwinds. At the same time, the outlook acknowledges that high valuations in tech names and concentration risk in the S&P 500 pose challenges for diversified portfolios. Investors are advised to remain disciplined, focusing on quality and earnings visibility rather than chasing momentum.