RBC Capital Markets has turned more optimistic on US equities, raising its 12-month forecast for the S&P 500 to 7,750signalling nearly 14% upside from current levels. The new projection, announced by RBC’s head of US equity strategy Lori Calvasina, comes as an increasing number of Wall Street firms adopt a bullish stance heading into 2025.

RBC has shifted to a rolling 12-month outlook rather than the traditional year-end target, though the new estimate places the firm among the most optimistic forecasters. It is not far from Deutsche Bank’s 8,000 target for end-2026and sits in line with several houses expecting the bull market to extend.

Why RBC is bullish

Calvasina highlights a potential Federal Reserve rate-cut cycle as the biggest catalyst. Historically, when the Fed trims rates by 1% or less over 12 monthsthe S&P 500 has risen 13.3% on averageshe noted.

Markets now price in an 87% chance of a rate cut by the Fed’s December meetingsharply higher than the 30% probability seen just two weeks ago, according to the CME FedWatch Tool.

Earnings strength supports the outlook

Corporate earnings remain a strong pillar of the bullish case.
S&P 500 companies posted 13.4% profit growth in Q3, driven largely by Big Tech, marking the fourth straight quarter of double-digit earnings expansion.

This exceeded the 10-year average of 9.5%, although slightly below the five-year average of 14.9%. RBC believes improving earnings beyond the Magnificent 7 will broaden market participation.

Market leadership may shift

Calvasina adds that while mega-cap growth stocks dominated again in 2025, early signs of rotation into value stocks and broader market segments are emerging — a trend that could strengthen as earnings improve across sectors.

“While we give an edge to value and the broader market over growth and the Mag 7 for now, this tug-of-war may not be over yet,” she wrote, signalling that leadership shifts may continue over the coming months.