The big things you need to know: First, reporting season stats have come in “slightly squishy” in our view, suggesting to us that the choppy price action in the S&P 500 of late has been about more than geopolitical concerns. Second, what we read in earnings call transcripts this past week continues to suggest that the macro backdrop is mixed, though we are not seeing any indications of major problems. Third, the thing that jumped out the most to us in our other updates was the slight downtick in optimism on the stock market outlook in the latest Conference Board consumer confidence survey.

If you’d like to hear more, here’s another five minutes.

Starting with Takeaway #1: A Slightly Squishy Reporting Season So Far

In our last podcast we noted that it had been a “sleepy” start to 4Q25 reporting season, as the first tranche of companies had been slow to roll out and the stats and commentary weren’t bad, but were uninspiring and somewhat mixed. With another 100 companies in the S&P 500 having released results this past week, we now think it’s fair to replace “sleepy” with “slightly squishy” as the phrase we’d use to describe results so far. Here’s what we’re seeing on the stats:

• Meanwhile, our broader gauge of earnings sentiment continues to look weak. At 51.4%, the rate of upward EPS estimate revisions for the S&P 500 continues to sit well below the highs of last September (65%). We also continue to see fading dominance on this stat for Large Caps relative to Small Caps, and, within the S&P 500, of the biggest market cap names relative to the rest of the index. This is something we think has helped the leadership rotation or broadening out trade in the US so far this year. Note that it will take a little more time for the results of the mega cap Growth companies that reported this week to filter into the stats and we’re eager to see the next update here.

With another 121 companies in the S&P 500 expected to report results in the current week, it’s possible these stats will change significantly. But we think the current snapshot is still worth noting as it suggests that geopolitics is far from the only reason the price action in the stock market has been choppy in recent weeks.

One chart we are keeping a close eye on is the rate of upward EPS estimate revisions for the S&P 500 Technology sector which continues to sit near typical peaks, alongside deterioration in this stat for most other sectors.

Moving on to Takeaway #2: What We Read Last Week Continues to Suggest That the Macro Backdrop Is Mixed

As usual, our team combed through S&P 500 earnings call transcripts, looking for breadcrumbs on the macro backdrop and other commentary on key themes in the equity community. Here are some of our general impressions of what we read:

• The discussion of the macro backdrop and general outlook continues to be difficult to summarize by using anything other than the word mixed or varied. Overall, we’re not seeing any red flags in the commentary that would point to a major problem. But at the same time, there are clear puts and takes. On the positive side, strength in defense, capital markets activity and pipelines, certain end markets or geographies which varied by company, strength in data centers and AI, and optimism on the year ahead continued to show up in these discussions. On the negative side, companies continued to highlight uncertainty, weak consumer sentiment and affordability challenges, mixed end markets in their own businesses, tariff impacts, and geopolitics.

• Consumer color. We’ve now entered a part of reporting season where we’re getting better boots-on-the-ground color on the consumer. We’ve simply gotten more results in from companies directly linked to the consumer and are no longer having to rely on Financials companies for their higher-level take. One consumer company summed up well what we’ve been reading when they noted that they have continued to see mixed signals. On the positive side, companies have noted consumer resiliency, a willingness to spend on preferred brands, no signs of weakness in overall financial metrics, optimism around spending from tax refunds, and a preference for spending on experiences. On the negative side, companies noted ongoing challenges with affordability and housing, the cumulative impacts of inflation, weakness around holiday spending and big-ticket items, uncertainty, and weakness among Hispanic customers.

• From a generalist perspective, AI commentary seemed more plentiful and substantive this past week given the number of big cap Tech companies that reported. But even outside of the companies from the Tech and Tech-adjacent sectors, AI commentary jumped out to us this past week for the amount of mindshare it occupied. Tech companies emphasized longer-term secular growth themes including data centers. Outside of Tech, the commentary continued to focus on efficiency, productivity, data analytics, product innovation, enhancing customer experience, automation, workflow improvement, and safety improvement. As has been the case in previous quarters, some companies continued to highlight how the AI theme is still early days. Overall, it seems to us that the descriptions of use cases are getting more detailed and robust and are becoming higher quality. While this commentary has been some of the most engaging to us from a reader perspective, we continue to find ourselves somewhat frustrated that companies outside of the Tech space don’t seem to be able yet to articulate more discrete financial impacts. We will be watching to see if this conversation continues to evolve in coming quarters.

And wrapping up with Takeaway #3: What Else Jumps Out From Our Other Updates

• Optimism on the stock market stalled slightly on the latest Conference Board survey. We have viewed this question in the Conference Board survey as one way to track stock market dynamics for the closely watched retail investor. This indicator recently returned to levels in line with most past peaks, other than the latest one, and has been signaling the potential for more froth in the US equity market than what we’ve been seeing in the AAII survey question on the stock market outlook or CFTC data on US equity futures positioning which have both been elevated but well below all-time highs.

That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.