U.S. Equities Defy Headwinds as Corporate Earnings Propel Bull Market

Corporate earnings have exceeded expectations throughout the first half of 2026, providing the necessary momentum to keep the bull market intact. The Information Technology sector has been a standout performer, fueled by a 49% year-over-year profit increase and heavy capital investment in artificial intelligence. Kelly Bogdanova, Vice President and Portfolio Analyst at RBC Wealth Management–U.S., noted that while earnings have cleared a high bar, investors should remain cautious as the November 3 midterm elections approach. Historical data since 1934 suggests that election cycles often coincide with an average 21% market correction, making volatility a likely prospect in the coming months.

In the fixed income space, rising yields have pushed total returns into negative territory for the year. With 30-year government bond yields averaging above 4.0%—a level not seen since 2009—RBC expects the 10-year Treasury yield to test the 4.8% to 5.0% range. Given that price appreciation for bonds remains unlikely, the firm advises shifting focus toward maximizing income through corporate bonds or bank-issued hybrid preferred securities. Beyond immediate market cycles, RBC highlights five long-term structural shifts, including an AI-driven spending surge projected to hit $668 billion this year, aging global demographics, and a structural increase in defense budgets, as the forces that will define investment strategy for the next decade.