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Equities

Tech Rally Drives Markets Higher Amid Resilient Earnings Growth

Issue 10Week ending April 19, 20268 sources

S&P 5007,022.95+1.8%
S&P/TSX24,375.00+0.9%
Nasdaq24,102.70+2.4%
Russell 20002,485.30+0.6%
VIX17.94-2.1pts
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Week Ending April 19, 2026

Tech Rally Drives Markets Higher Amid Resilient Earnings Growth

§ 01

Key takeaways

Sectors

Technology leadership accelerated on AI earnings momentum while financials lagged on rate cut expectations, signaling growth sector dominance over cyclicals.

Style

Growth meaningfully outpaced value this week with tech driving the performance gap to widest level since February, suggesting factor regime shift toward secular themes.

Hedging

VIX compression below 18 and put/call ratios at multi-month lows indicate complacent positioning, warranting selective protection despite bullish momentum.

§ 02

Executive summary

Equity markets surged higher this week led by technology's 3.2% gain as AI-driven earnings momentum accelerated across mega-caps. The S&P 500 gained 1.8% to 7,023 while the NASDAQ jumped 2.4%, marking the strongest tech outperformance since Q1. Growth factors decisively outpaced value as investors rotated toward secular themes over cyclical positioning. Canadian equities lagged with TSX up just 0.9%, weighed by financials amid dovish BoC expectations.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureBalanced

Sectors Risk On · Style Growth · Hedging Underweight

Snapshot compiled Apr 17, 2026 · source dates vary

SectorsRisk On
StyleGrowth
HedgingUnderweight

Inputs used

S&P 5007,022.95+1.8% 1W
TSX24,375+0.9% 1W
Nasdaq24,102.7+2.4% 1W
Russell 20002,485.3+0.6% 1W
VIX17.94-2.1 pts 1W
§ 04

Sectors

15 points

Cyclical

  • Financials underperform Banks -0.8% WoW as rate cut bets intensify — RBC sees 'NIM pressure persisting through H2 2026' on dovish central bank pivot
  • Energy mixed Oil services +1.2% on capex upturn but E&P producers flat at $78 WTI — TD Securities maintains Overweight citing 'compelling FCF yields at 12%'
  • Industrials momentum Sector +1.4% on infrastructure spending; BMO upgrades Canadian rails to Overweight — 'multi-year earnings visibility improving'
  • TSX cyclicals lag Financials (33% weight) dragging performance as Big Six trade at 9.8x forward P/E — Scotiabank sees 'rare value opportunity vs US peers at 13.5x'
  • Positioning shift Underweight financials, neutral energy and industrials — cyclical breadth narrowing as growth themes dominate (Goldman Sachs)

Defensive

  • Utilities resilient Sector flat amid rate volatility with dividend yields at 4.2% — National Bank sees 'attractive income proxy' as 10Y yields hold 4.1%
  • Healthcare lagging XLV -0.6% on biotech rotation concerns; Fidelity Canada reduces allocation citing 'valuation stretch in growth names'
  • Consumer Staples Defensive rotation absent as sector trails at -0.3% — investors favoring growth over safety in current risk-on environment
  • REITs pressured Real estate -1.2% on rate sensitivity; CIBC sees 'continued headwinds' until Fed pivot becomes more certain
  • Risk-on signal Defensive underperformance confirms growth momentum and low fear regime with investors embracing risk assets

Technology

  • Magnificent 7 surge Mega-caps +3.8% led by NVIDIA +6.2% on data center demand — representing 28% of S&P 500 total return this week
  • AI earnings momentum Cloud infrastructure spending accelerating with Microsoft +4.1%, Google +3.7% — Morgan Stanley raises targets on 'AI capex supercycle'
  • Valuation expansion Tech forward P/E at 26.8x vs 5Y average of 24.1x — growth premium justified by 18% earnings growth vs 8% S&P average
  • Concentration risk Top 10 stocks now 34% of S&P 500 market cap — UBS warns of 'increasing dispersion risk' but maintains Overweight tech
  • Canadian tech TSX Technology +2.1% outpacing broader index; RBC GAM sees 'AI beneficiaries emerging' in Canadian software names
§ 05

Style

10 points

Growth vs value

  • Growth dominance Russell 1000 Growth +2.8% vs Value +0.9%, marking 190bp outperformance — strongest since February tech rally
  • Valuation divergence Growth trades at 27.2x forward P/E vs Value at 15.1x, premium at 80% above 5Y average of 45%
  • Earnings differential Growth names posting 19% EPS growth vs 6% for value cohort — J.P. Morgan sees 'structural advantage to secular themes'
  • Canadian context TSX inherent value bias (energy, financials, materials) underperforming S&P growth orientation by 90bp this week
  • Factor rotation Wellington Management shifts to growth overweight citing 'AI productivity gains trumping cyclical recovery hopes'

Size & quality

  • Large cap leadership Russell 1000 +1.9% vs Russell 2000 +0.6% as mega-cap concentration drives performance
  • Quality outperforms High-ROE, low-debt names +2.1% vs broad market — Mackenzie Investments favors 'quality growth at reasonable price'
  • Small cap challenges Russell 2000 earnings growth just 4% vs 12% for large caps; higher interest rate sensitivity weighing on multiples
  • Canadian mid-caps S&P/TSX Completion Index +0.7%, lagging large caps — AGF sees 'stock-picker opportunities in neglected mid-cap space'
  • Size premium Large cap momentum sustainable given earnings visibility and balance sheet strength — T. Rowe Price overweights mega-caps
§ 06

Hedging

10 points

Volatility

  • VIX compression Volatility index at 17.94, down 2.1 points to 'normal' regime below 20 — complacency building as markets grind higher
  • Term structure VIX contango steep with 3M VIX futures at 19.8 vs spot 17.9 — options market pricing low near-term risk
  • Put/call positioning CBOE put/call ratio at 0.82, lowest since January — retail and institutional investors reducing hedging activity
  • Protection cost 3M 5% OTM SPX puts cost 1.4% of notional, down from 2.1% last month — hedging becoming more affordable
  • Volatility outlook BlackRock Investment Institute expects 'vol regime to remain contained' absent major macro shock or earnings disappointment

Tactical

  • Cash deployment Institutions reducing cash from 4.8% to 4.2% average allocation — Invesco advises 'measured deployment into strength'
  • Collar strategies Cost-efficient for concentrated tech positions with call premiums elevated — implied vol skew favors protective structures
  • Cross-asset correlation Stock-bond correlation at -0.3, normal regime supportive of balanced portfolio construction
  • Credit spreads IG spreads tight at 95bp over Treasuries, signaling low tail risk — high yield at 315bp suggests credit market stability
  • Rebalancing trigger Equity allocation drift 3-5% above targets for balanced mandates — systematic rebalancing creating support levels
§ 07

Institutional views

10 institutions

Institutional Perspectives

RBC Capital Markets

Lori Calvasina

bullish
S&P 500 Target: 7,400
Key Call: Overweight technology on AI productivity gains, target raised from 7200

Goldman Sachs

David Kostin

neutral
S&P 500 Target: 7,100
Key Call: Market-weight equities with growth-over-value preference

TD Securities

Andrew Kelvin

bullish
S&P 500 Target: 7,350
Key Call: Overweight Canadian energy and US technology

Morgan Stanley

Mike Wilson

neutral
S&P 500 Target: 6,900
Key Call: Cautious on valuation stretch, prefer quality at reasonable prices

BMO Capital Markets

Brian Belski

bullish
S&P 500 Target: 7,500
Key Call: Most bullish on US equities, sees rotation into financials later in year

J.P. Morgan

Marko Kolanovic

neutral
S&P 500 Target: 7,000
Key Call: Balanced allocation with hedging overlay given elevated valuations

Bank of America

Savita Subramanian

bullish
S&P 500 Target: 7,300
Key Call: Overweight growth sectors, underweight rate-sensitive cyclicals

Scotiabank

Hugo Ste-Marie

neutral
S&P 500 Target: 6,950
Key Call: Cautious on Canadian banks, prefer US exposure

National Bank Financial

Denis Senecal

bullish
S&P 500 Target: 7,250
Key Call: Overweight Canadian technology and healthcare

Wellington Management

Research Team

neutral
S&P 500 Target: 7,050
Key Call: Quality growth focus with defensive positioning in late-cycle environment
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Portfolio implications

Portfolio Implications

Conservative

  • Sector allocation: Underweight cyclicals, overweight utilities and healthcare for stability
  • Factor positioning: Quality and low-volatility tilt, limit growth exposure to 15% of equity allocation
  • Hedging strategy: Maintain 5-10% portfolio in protective puts or structured notes
  • Canadian weighting: 25% TSX allocation with focus on dividend aristocrats and defensive sectors

Balanced

  • Sector balance: Market-weight tech with selective growth names, modest cyclical underweight
  • Factor approach: 60% growth, 40% value allocation with quality overlay across both styles
  • Risk management: 3-5% VIX calls or protective structures during low volatility periods
  • Geographic split: 35% Canadian, 50% US, 15% international with currency hedging on CAD weakness

Growth

  • Sector concentration: Overweight technology at 30%+ allocation, growth-oriented healthcare and communication services
  • Factor tilts: Pure growth orientation with momentum and quality overlays, minimal value exposure
  • Tactical hedging: Use strength to establish collar positions on concentrated tech holdings
  • International emphasis: 70% US exposure for access to global growth leaders, 25% Canada, 5% emerging markets
§ 09

Key dates

5 events

Key Dates Ahead

DateEventRelevance
April 22Tesla Q1 EarningsAI/autonomous driving narrative catalyst
April 23Bank of Canada Rate DecisionExpected 25bp cut could pressure Canadian financials
April 24Meta Q1 EarningsAI monetization and capex spending guidance
April 25US Q1 GDP PreliminaryGrowth trajectory confirmation for earnings outlook
April 26Amazon, Apple EarningsMega-cap earnings complete, sets tone for May
§ 10

Sources

8 sources

Sources & References