Closing Bell: Overtime · Sep 29, 2026
With Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets
The S&P 500 has gone sideways instead of falling, but Lori Calvasina says her firm is still calling for a 5% to 10% drawdown.
Most strategists reading a market that has stalled rather than dropped treat that as a sign the correction call was wrong. Calvasina's list of risks includes interest rates, the Iran war, the midterms, and 2027 earnings forecasts she thinks are too optimistic. None of them have gone away; only the timing has slipped.
"It's almost like sideways has been what's replaced. What we thought was a pull back." — Lori Calvasina
Calvasina runs US equity strategy for RBC Capital Markets and publishes the firm's weekly market outlook. She told CNBC's Closing Bell: Overtime that investors keep finding reasons to wave off the risks she flags, even as her own reading of two separate capex cycles keeps her constructive on the AI buildout.
The full segment is covered here so you can skip it.
Here are the 4 calls that matter.
Key Takeaways
RBC is still calling for a 5% to 10% pullback, even though the market has gone sideways instead of down since mid-August
There are two separate capex cycles running at once — mega-cap spending near its peak, and the rest of the market only in its early innings
AI regulation is mostly a state and local story, not a federal one, which is why Washington's stance changes less than investors assume
US and non-US valuations are back near their five-year average, which no longer clearly favors US leadership
Software valuations have already been "decimated," but industrials and utilities are lagging the AI rotation trade
1. Still Expecting a Pullback
The host asked whether the market can keep absorbing higher bond yields, with utilities down 17% and homebuilders off 21% from their recent highs.
RBC is holding its pullback call even though the market went sideways instead
"We've been looking for 5 to 10% drawdown. I think technically mid-August is still the high. But we're really not down all that much." — Lori Calvasina
"It's almost like sideways has been what's replaced. What we thought was a pull back. We're still making that pull back call." — Lori Calvasina
Investors keep arguing the known risks don't matter
She said clients push back hardest on her 2027 earnings-growth concerns and on the midterms, arguing that a divided government still leaves President Trump with veto power over any legislation.
"So it does look like, you know, people are trying to make excuses for this market." — Lori Calvasina
