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Equities

Tech Earnings Drive Markets Higher as VIX Stays Elevated

Issue 11Week ending April 26, 202610 sources

S&P 5007,108.40+1.8%
S&P/TSX24,450.00+2.1%
Nasdaq24,438.50+2.4%
Russell 20002,890.20+0.9%
VIX19.31-1.2pts
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Week Ending April 26, 2026

Tech Earnings Drive Markets Higher as VIX Stays Elevated

§ 01

Key takeaways

Sectors

Tech leadership drove broad market gains while energy lagged on oil weakness, signaling rotation toward growth-sensitive sectors amid earnings beats.

Style

Growth outperformed value by 180bp this week as mega-cap tech earnings exceeded expectations, widening the P/E premium to 15-year highs.

Hedging

VIX declined but remains above 19, suggesting underlying caution despite equity gains as options markets price elevated tail risk.

§ 02

Executive summary

Equity markets surged this week led by technology earnings beats, with the S&P 500 gaining 1.8% and NASDAQ up 2.4%. Canadian markets outpaced with TSX +2.1% driven by financials and materials strength. Growth significantly outperformed value amid mega-cap momentum, though VIX remains elevated at 19.3 signaling persistent volatility concerns. Key theme: earnings-driven sector rotation favoring growth over cyclicals.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Sectors Risk On · Style Growth · Hedging Neutral

Snapshot compiled Apr 24, 2026 · source dates vary

SectorsRisk On
StyleGrowth
HedgingNeutral

Inputs used

S&P 5007,108.4+1.8% 1W
TSX24,450+2.1% 1W
Nasdaq24,438.5+2.4% 1W
Russell 20002,890.2+0.9% 1W
VIX19.31-1.2 pts 1W
§ 04

Sectors

15 points

Cyclical

  • **Financials mixed signals ** Canadian banks +3.1% WoW on NIM expansion hopes — RBC sees 'multi-quarter earnings tailwind from rate stability' (RBC Capital Markets, Apr 2026)
  • **Energy sector pressure ** TSX Energy -2.4% as WTI fell to $78; Scotiabank downgrades sector to Underweight citing 'demand headwinds in China'
  • **Materials momentum ** Base metals +1.9% on infrastructure spending — BMO upgrades miners to Overweight on 'North American reshoring capex cycle'
  • **Industrials consolidation ** Sector flat after 6-week rally; TD Securities sees 'pause before next leg higher on order book strength'
  • **TSX cyclical breadth ** Financials (33% weight) driving index outperformance — National Bank sees Canadian banks at 9.8x forward P/E vs US peers at 12.5x

Defensive

  • **Utilities underperform ** Sector -1.2% WoW as 10Y yield holds 4.1%; defensive rotation stalling amid risk-on sentiment
  • **Healthcare lagging ** XLV -0.8% relative to market as biotech weakness offsets pharma stability — rotation away from defensives continues
  • **Consumer Staples pressure ** Margin compression concerns as input costs rise; sector trading at 15.2x forward P/E vs 5Y average of 16.8x
  • **REITs rate sensitive ** Canadian REITs -1.8% on BoC hawkish tone; CIBC sees 'prolonged pressure until rate cut clarity emerges'
  • **Risk-on signal ** Defensive underperformance confirms growth preference — defensive vs cyclical spread widest since January 2026

Technology

  • **Magnificent 7 leadership ** Mega-cap tech +3.8% WoW on earnings beats; combined market cap now 32% of S&P 500 weight — concentration risk rising
  • **AI infrastructure boom ** Cloud capex guidance exceeded estimates; Morgan Stanley raises AI infrastructure TAM to $1.2T by 2028
  • **Semiconductor strength ** SOX Index +4.2% as memory cycle turns; Goldman Sachs upgrades semis to Overweight on 'inventory normalization complete'
  • **Valuation expansion ** Tech forward P/E now 28.5x vs 5Y average of 24.2x — premium justified by 22% earnings growth vs S&P 8%
  • **Canadian tech lag ** TSX Tech +1.1% underperforms Shopify weakness; RBC sees 'valuation reset opportunity in quality Canadian tech names'
§ 05

Style

10 points

Growth vs value

  • **Growth dominance ** Russell 1000 Growth +2.8% vs Value +1.0% — 180bp weekly outperformance driven by mega-cap tech earnings
  • **Valuation spread widening ** Growth P/E premium now 8.2x vs historical average of 5.8x — BofA warns of 'stretched valuations in growth cohort'
  • **Earnings differential ** Growth companies posting 22% EPS growth vs value at 6% — justifying premium despite absolute levels
  • **Canadian context ** TSX inherent value bias (energy, financials, materials 65% weight) underperforming S&P growth tilt by 180bp YTD
  • **Institutional rotation ** UBS upgrades Growth to Overweight citing 'earnings momentum trumps valuation concerns in current cycle'

Size & quality

  • **Large cap leadership ** Russell 1000 +2.1% vs Russell 2000 +0.9% — mega-cap concentration driving market gains amid quality flight
  • **Small cap headwinds ** Higher rates and credit concerns weigh on small caps; 47% of Russell 2000 still unprofitable vs 12% in Russell 1000
  • **Quality factor momentum ** Low-leverage, high-ROE names outperforming by 90bp — Capital Group overweights 'quality at reasonable price' theme
  • **Credit sensitivity ** Small cap performance correlated with credit spreads; IG spreads at 95bp suggest continued large cap preference
  • **Canadian mid-cap opportunity ** S&P/TSX Completion Index lagging; Mackenzie Investments sees 'valuation disconnect in Canadian mid-caps' at 12.1x P/E
§ 06

Hedging

10 points

Volatility

  • **VIX regime elevated ** VIX at 19.3 remains in 'normal' range but above 15-20 comfort zone — CBOE data shows persistent put buying despite rally
  • **Term structure mixed ** VIX futures show mild contango through 3M then flatten — suggests near-term caution but not crisis pricing
  • **Options skew elevated ** 5% OTM put premium 1.8x historical average; J.P. Morgan notes 'investors paying up for downside protection'
  • **Put/call ratios ** CBOE equity put/call at 0.68 vs 0.55 average — hedging demand elevated despite market gains
  • **Volatility outlook ** Wells Fargo expects VIX 15-22 range through Q2 — 'earnings season providing direction but macro uncertainty persists'

Tactical

  • **Cash deployment selective ** Fidelity recommends 3-5% cash while markets digest earnings — 'opportunistic deployment on any 2-3% pullback'
  • **Collar strategies active ** Institutional use of collars up 23% QoQ on concentrated tech positions — cost-efficient downside protection
  • **Stock-bond correlation ** 60-day correlation at 0.42, above zero but not stressed — bonds providing some portfolio diversification
  • **Credit spreads stable ** IG spreads 95bp, HY 385bp suggest benign credit conditions — equity risk premium adequate at current levels
  • **Rebalancing signals ** BlackRock notes 'tactical underweight equities after 8% Q1 gain' — profit-taking into strength recommended
§ 07

Institutional views

12 institutions

Institutional Perspectives

RBC Capital Markets

Lori Calvasina

bullish
S&P 500 Target: 7,400
Key Call: Overweight financials and healthcare; sees earnings growth acceleration in H2 2026

Goldman Sachs

David Kostin

neutral
S&P 500 Target: 7,200
Key Call: Market-weight equities; concentration risk in mega-cap tech warrants caution

TD Securities

Andrew Kelvin

bullish
S&P 500 Target: 7,350
Key Call: Overweight TSX over S&P 500; Canadian valuations attractive at 14.2x forward P/E

Morgan Stanley

Mike Wilson

neutral
S&P 500 Target: 7,100
Key Call: Earnings slowdown in H2 limits upside; prefers quality over growth at current valuations

BMO Capital Markets

Brian Belski

bullish
S&P 500 Target: 7,500
Key Call: US equity secular bull market intact; overweight industrials and materials

Bank of America

Savita Subramanian

bearish
S&P 500 Target: 6,800
Key Call: Overvalued market vulnerable to earnings disappointment; underweight growth vs value

National Bank Financial

Denis Girouard

neutral
S&P 500 Target: 7,150
Key Call: Selective stock picking environment; overweight Canadian energy and financials

J.P. Morgan

Dubravko Lakos-Bujas

bullish
S&P 500 Target: 7,300
Key Call: AI investment cycle supports tech leadership; overweight semiconductors and software

UBS

Keith Parker

neutral
S&P 500 Target: 7,250
Key Call: Growth over value in near-term; concerned about late-cycle dynamics emerging

Scotiabank

Hugo Ste-Marie

bearish
S&P 500 Target: 6,900
Key Call: Canadian dollar weakness opportunity; underweight energy, overweight domestic sectors

CIBC

Ian de Verteuil

neutral
S&P 500 Target: 7,200
Key Call: Balanced portfolio approach; equal-weight TSX vs S&P 500 allocation

Desjardins

Jimmy Jean

bullish
S&P 500 Target: 7,400
Key Call: Rate cut cycle supportive; overweight interest-sensitive sectors including REITs
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • **Sector allocation:** 40% defensives, 35% financials, 25% diversified — emphasize dividend yield and capital preservation
  • **Quality tilt:** Focus on low-leverage, consistent earnings companies — avoid speculative growth and small caps
  • **Hedging strategy:** 5-7% cash, consider 3-6 month protective puts on core holdings — VIX above 19 makes protection expensive but warranted
  • **Canadian emphasis:** 60% TSX, 40% international — overweight Canadian banks and utilities for income and stability

Balanced

  • **Core-satellite approach:** 70% core diversified, 30% tactical tilts — current tilt toward large-cap growth given earnings momentum
  • **Sector balance:** Market-weight most sectors, modest overweight tech and financials — avoid energy given demand concerns
  • **Factor positioning:** Blend growth and value — 55% growth, 45% value allocation given current earnings differential
  • **Currency hedging:** 50% CAD hedged on US exposure — BoC-Fed policy divergence suggests CAD weakness continues

Growth

  • **Full risk-on:** 90% equities, overweight technology and growth sectors — maximize exposure to AI infrastructure theme
  • **Momentum factors:** Overweight large-cap growth, quality momentum names — earnings revisions driving outperformance
  • **Tactical hedging:** Use options strategies rather than cash drag — collar strategies on concentrated positions
  • **Global allocation:** 70% US, 20% international developed, 10% Canada — maximize exposure to secular growth themes
§ 09

Key dates

6 events

Key Dates Ahead

DateEventRelevance
April 28FOMC Meeting beginsRate decision and Powell press conference Wednesday
April 30Apple earningsLargest S&P 500 weight, iPhone cycle and services growth key
May 1US Employment reportApril jobs data impacts Fed rate cut timing expectations
May 2Amazon earningsCloud growth and AI capex guidance crucial for tech sector
May 3Bank of Canada decisionRate hold expected but language on timing of cuts matters
May 3Options expirationLarge monthly options expiry could drive volatility
§ 10

Sources

10 sources

Sources & References