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Equities

Markets Rally Despite Elevated VIX as Tech Leadership Returns

Issue 7Week ending March 29, 20268 sources

S&P 5006,477.16+2.1%
S&P/TSX24,580.30+1.8%
Nasdaq21,408.08+2.8%
Russell 20002,890.45+1.2%
VIX27.44-3.2pts
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Week Ending March 29, 2026

Markets Rally Despite Elevated VIX as Tech Leadership Returns

§ 01

Key takeaways

Sectors

Technology led the rebound with NASDAQ +2.8% while energy lagged on crude weakness — cyclical breadth remains selective despite risk-on sentiment.

Style

Growth decisively outperformed value by 180bps as mega-cap tech regained momentum, with the growth P/E premium expanding to 2.3x vs 1.8x historical average.

Hedging

VIX fell 320bps to 27.44 but remains in elevated regime, suggesting protection remains prudent despite this week's rally — term structure still in mild backwardation.

§ 02

Executive summary

Equity markets rebounded strongly despite elevated volatility, with the S&P 500 gaining 2.1% and NASDAQ surging 2.8% as mega-cap technology stocks reasserted leadership. The TSX followed with a 1.8% gain led by financials and industrials. While the VIX declined to 27.44, it remains in elevated territory above the 20 threshold, reflecting underlying uncertainty. Growth decisively outperformed value by 180 basis points, marking the sharpest weekly style divergence since February.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Sectors Risk On · Style Growth · Hedging Neutral

Snapshot compiled Mar 27, 2026 · source dates vary

SectorsRisk On
StyleGrowth
HedgingNeutral

Inputs used

S&P 5006,477.16+2.1% 1W
TSX24,580.3+1.8% 1W
Nasdaq21,408.08+2.8% 1W
Russell 20002,890.45+1.2% 1W
VIX27.44-3.2 pts 1W
§ 04

Sectors

15 points

Cyclical

  • **Financials leadership ** Canadian banks +3.4% WoW on rising rates optimism — RBC sees Big Six trading at 11.2x forward P/E, 'most attractive entry point in 18 months' (RBC Capital Markets, Mar 2026)
  • **Energy weakness ** TSX Energy -1.8% as WTI crude fell to $76/bbl; TD Securities downgrades sector to Underweight citing 'demand destruction risks in Q2'
  • **Industrials momentum ** CN Rail and CP Kansas City led sector +2.1% on freight volume recovery; BMO upgrades rails to Outperform on 'pricing power inflection'
  • **Materials mixed ** Base metals +1.4% on China stimulus hopes, but gold miners -2.1% as bullion retreated; Scotiabank sees copper at $9,500/tonne by year-end
  • **Positioning ** Overweight financials and industrials, underweight energy — cyclical breadth improving but selective (Goldman Sachs)

Defensive

  • **Utilities lagging ** Sector -0.8% WoW as 10Y yield rose 15bps to 4.35%; yield premium to S&P 500 narrowed to 120bps from 140bps
  • **Healthcare resilient ** Defensive characteristics supported +0.4% return; UBS sees sector at 14.5x forward P/E vs 16.2x S&P 500 — 'rare value opportunity'
  • **Consumer Staples ** Flat performance at +0.1% as margins face input cost pressures; National Bank sees 'earnings headwinds through H1 2026'
  • **REITs volatile ** Canadian REITs -1.2% on rate sensitivity; CIBC projects FFO growth of 3% in 2026 vs 6% consensus — 'overly optimistic expectations'
  • **Signal ** Clear risk-on rotation away from defensives as growth momentum accelerates

Technology

  • **Magnificent 7 surge ** NVIDIA +8.2%, Apple +4.1%, Microsoft +3.8% drove NASDAQ outperformance — collective market cap now $18.7T or 32% of S&P 500
  • **AI momentum ** Semiconductor complex +6.4% on enterprise AI adoption data; Morgan Stanley raises 2026 AI capex forecast to $280B from $250B
  • **Valuation stretch ** Tech trading at 28.5x forward P/E vs 22.1x 5Y average — 'valuation concerns secondary to earnings momentum' (J.P. Morgan, Mar 2026)
  • **Earnings growth ** Tech sector 2026 EPS growth of 22% vs 11% S&P 500; revenue acceleration in cloud and AI segments driving multiple expansion
  • **Positioning ** Most institutions remain Overweight despite valuation concerns — 'secular growth story intact' per BofA Securities
§ 05

Style

10 points

Growth vs value

  • **Relative performance ** Growth outperformed value by 180bps, largest weekly spread since February — Russell 1000 Growth +2.8% vs Value +1.0%
  • **Valuation spread ** Growth P/E premium expanded to 2.3x vs 1.8x historical average; Bridgewater warns 'unsustainable without earnings delivery'
  • **Earnings differential ** Growth companies reporting 24% EPS growth vs 8% for value cohort — 'widest gap since 2021' (Research Affiliates)
  • **Canadian context ** TSX growth stocks +2.9% vs value +0.8%; Shopify and tech names leading but represent <5% of index weight
  • **Institutional calls ** 70% of strategists favor growth over next 3 months per BofA survey — highest since December 2021

Size & quality

  • **Large vs small ** Russell 1000 +2.3% vs Russell 2000 +1.2% — mega-cap concentration driving performance divergence
  • **Quality factor ** Low-leverage, high-ROE stocks +2.8% as credit spreads remain elevated at 145bps; quality premium at 2Y highs
  • **Small cap challenges ** Russell 2000 earnings still negative YoY at -3.2%; Wellington sees 'no catalyst until credit conditions ease'
  • **Canadian mid-caps ** S&P/TSX Mid-Cap +2.1% outperformed large caps; RBC GAM sees 'attractive valuations in domestic-focused names'
  • **Positioning ** Overweight quality and large caps, underweight small caps until credit normalization — AQR Capital Management
§ 06

Hedging

10 points

Volatility

  • **VIX regime ** 27.44 level remains in elevated territory (>20) despite 320bp weekly decline — 'elevated vol likely to persist' (CBOE, Mar 2026)
  • **Term structure ** VIX curve in mild backwardation with 1M at 28.1 vs 3M at 26.8 — indicates near-term stress but not crisis conditions
  • **Options positioning ** Put/call ratio at 0.68, down from 0.85 — retail put buying subsided but institutional hedging remains active
  • **Protection cost ** 3M 5% OTM SPX puts cost 2.8% of notional vs 2.1% average — 'expensive but justified given macro uncertainty' (Goldman Sachs)
  • **Institutional view ** T. Rowe Price recommends maintaining 'elevated hedging posture through Q2 2026' given election and Fed uncertainties

Tactical

  • **Cash allocation ** Deploy 25-50% of cash reserves on market dips below 6,300 S&P 500 level — Fidelity Canada tactical framework
  • **Collar strategies ** 6,400/6,600 collars cost 0.8% for 3M protection on concentrated tech positions — 'attractive risk/reward' (UBS)
  • **Cross-asset correlation ** Stock/bond correlation at +0.4, highest since 2022 — traditional 60/40 diversification compromised
  • **Tail risk indicators ** Credit spreads at 145bps vs 110bp average, MOVE index at 124 vs 100 norm — 'multiple stress signals flashing' (BlackRock)
  • **Rebalancing ** Portfolios +3.2% above equity targets after rally — systematic rebalancing triggers activated for March month-end
§ 07

Institutional views

12 institutions

Institutional Perspectives

RBC Capital Markets

Lori Calvasina

bullish
S&P 500 Target: 6,800
Key Call: Overweight Canadian banks and US technology - earnings momentum trumps valuation concerns

Goldman Sachs

David Kostin

neutral
S&P 500 Target: 6,500
Key Call: Maintain hedged equity exposure - elevated volatility regime persists through Q2

TD Securities

Andrew Kelvin

neutral
S&P 500 Target: 6,400
Key Call: Underweight energy, overweight financials - rate environment favors Canadian banks

Morgan Stanley

Mike Wilson

bearish
S&P 500 Target: 6,000
Key Call: AI capex boom unsustainable - earnings disappointment likely in H2 2026

BMO Capital Markets

Brian Belski

bullish
S&P 500 Target: 7,000
Key Call: Most bullish on Canadian rails and US industrials - infrastructure cycle beginning

J.P. Morgan

Dubravko Lakos-Bujas

neutral
S&P 500 Target: 6,600
Key Call: Growth over value for next 6 months - secular trends favor tech leadership

BlackRock

Wei Li

neutral
S&P 500 Target: 6,500
Key Call: Tactical underweight equities - prefer quality factors and hedged exposure

BofA Securities

Savita Subramanian

bullish
S&P 500 Target: 6,900
Key Call: Overweight technology and healthcare - defensive growth preferred

Scotiabank

Hugo Ste-Marie

neutral
S&P 500 Target: 6,450
Key Call: TSX outperformance likely - resource exposure benefits from China stimulus

National Bank Financial

Martin Lefebvre

bearish
S&P 500 Target: 6,100
Key Call: Overweight defensives and cash - economic slowdown risks underappreciated

Wellington Management

Jim Shanahan

neutral
S&P 500 Target: 6,550
Key Call: Quality factor leadership continues - focus on profitable growth companies

CIBC

Ian de Verteuil

bullish
S&P 500 Target: 6,750
Key Call: Canadian financials most attractive - earnings revisions turning positive
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • **Sector tilt:** 40% defensives (healthcare, utilities, staples) with quality dividend focus
  • **Factor:** Quality and low-volatility emphasis - avoid speculative growth names
  • **Hedging:** 10-15% cash, 5% OTM put protection for 3-month rolling coverage
  • **Canadian:** 35% TSX allocation emphasizing Big Six banks and defensive sectors

Balanced

  • **Sector tilt:** 25% technology, 20% financials, 15% healthcare - core sector diversification
  • **Factor:** Balanced growth/value with quality overlay - avoid extreme valuations
  • **Hedging:** 5% cash, systematic collar strategies on concentrated positions
  • **Canadian:** 30% TSX weight with currency hedging on 50% of international exposure

Growth

  • **Sector tilt:** 35% technology, 20% industrials, 15% financials - full cyclical exposure
  • **Factor:** Overweight growth and momentum - accept higher volatility for returns
  • **Hedging:** Minimal cash, tactical VIX calls for tail risk protection only
  • **Canadian:** 25% TSX allocation focused on Shopify, growth financials, tech names
§ 09

Key dates

6 events

Key Dates Ahead

DateEventRelevance
March 31Quarter-end rebalancingPotential volatility as funds rebalance after Q1 gains
April 2US Jobs ReportLabor market strength key for Fed policy outlook
April 3Bank of Canada Rate DecisionExpected hold at 4.25% but guidance matters for TSX financials
April 4Tesla Q1 Delivery NumbersBellwether for EV demand and tech sector momentum
April 7Alcoa EarningsUnofficial start of Q1 earnings season
April 10US CPI ReleaseInflation data critical for May Fed meeting expectations
§ 10

Sources

8 sources

Sources & References