Welcome to RBC’s Markets in Motion podcast, recorded March 9th, 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, we review the results of a survey we conducted of RBC’s equity analysts on the conflict in Iran, which helps explain the resilience we’ve seen in the S&P 500. Second, the valuation and sentiment barometers we’re tracking point to room for further downside in the S&P 500 in the near-term in absolute terms, while our work on US valuations vs. other global developed markets highlights why the US equity market has been embraced as a safe haven, helping outperformance versus global peers to re-ignite.
If you’d like to hear more, here’s another five minutes.
Takeaway #1: The analyst survey we conducted last helps explain why US equity markets have been so resilient amid the Iran conflict.
We asked our equity analysts to assume the conflict endures for more than four weeks, and oil stays above $100 for an extended period of time. We then asked them to indicate the impact to EPS from higher oil and gas prices, the revenue impact due to exposure to the Middle East, and the overall impact from knock-on effects.
Three key findings:
- First, fundamental risks to the US equity market from a worsening of the conflict are concentrated in certain areas and see as low overall. Among our non-Energy analysts, 72% said that EPS impacts from higher oil and gas would be “none,” “only a little,” or “not relevant/mixed/ don’t know.” The same was true for 77% when we asked about revenue impact from the Middle East impact, and 66% when we asked about impact from knock-on effects. Does this data suggest that a worsening of the conflict doesn’t matter to US equities? No, but it does suggest that the risks are concentrated in certain areas and that in many the potential impacts are not seen as highly significant.
- Second, Communication Services, Financials, Health Care, and Utilities stand out as some of the most insulated sectors from a worsening of the conflict. Almost all of our analysts in these industries replied to each of our questions regarding impact with “none,” “only a little,” or “not relevant/mixed/don’t know.” On the flip side, Consumer Staples and Materials were seen as being most impacted, though it should be noted that their answers were mostly “some/a decent amount” as opposed to “a lot” on all three of the questions that we asked.
- Third, Inflation and consumer confidence/sentiment were the top knock-on effects highlighted by our analysts. Next in line were demand issues, fuel prices, supply chains and transportation costs, and various issues related to a defensive tone or risk off bent. We find it interesting that inflation and consumer confidence – two problems US equity investors and public companies have been contending with at various points in the post COVID era – have been most in focus in terms of the challenges that this crisis presents. This may speak to the idea that the ripple effects of the conflict are a worsening of ongoing problems that can be managed.
Moving on to Takeaway #2: Signals from our valuation and sentiment work.
- Last week we highlighted several sentiment and valuation barometer’s we’re watching that have helped us gauge when periods of stress have gone too far in recent years in absolute terms for the S&P 500. None of them are signaling an end to the current moment we’re in right now.
- Net bulls on the AAII survey moved up last week – we think a further erosion of sentient would have been healthier for stocks. We’re watching for a move to 1 or 2 standard deviations below average.
- Meanwhile, the S&P 500 bottom-up market cap next 12 months P/E has moved down to 23x, but remains well above it’s average of 18.5x. In 2022, this P/E fell slightly below average at the market low.
- And the Russell 2000 FY2 P/E, which fell below 13x at the lows of the major drawdowns of 2022, 2023, and 2025, is back down to 16.1x, but still well above the average of 15.2x and not close to the 11-13x range which also tends to be seen in recessions.