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Equities

Cyclicals Extend Gains as VIX Holds Near Multi-Year Lows

Stocks kept climbing this week, with bank and industrial companies leading the way alongside big tech names, and market calm stayed near its steadiest levels in years.

Issue 22Week ending August 9, 202621 sources

S&P 5007,757.64+3.58%
S&P/TSXData unavailable
Nasdaq26,690.62+5.19%
Russell 2000Data unavailable
VIX15.15-1.94pts
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Week Ending August 9, 2026

Cyclicals Extend Gains as VIX Holds Near Multi-Year Lows

§ 01

Key takeaways

Sectors

Financials and industrials continue to lead cyclical breadth while defensives lag, a signal institutions read as durable risk-on positioning heading into September.

Style

Growth retains leadership on AI-driven mega-cap earnings, but value's valuation gap and Canadian bank strength are prompting some strategists to flag early rotation risk.

Hedging

VIX at 15.15 sits in the normal regime with contango intact, keeping protection cheap even as institutions debate whether complacency is building into September seasonality.

§ 02

Executive summary

U.S. equities extended gains this week, with the S&P 500 near 7,757.64 and the NASDAQ Composite above 26,690, as cyclicals and mega-cap tech both contributed to breadth. The VIX held at 15.15, a normal-regime reading that Goldman Sachs and UBS both flagged as supportive of continued risk-taking, though Morgan Stanley cautioned on stretched positioning into September seasonality. Financials and industrials led sector performance on firming rate expectations, while Canadian banks drew attention from RBC and TD for trading at a discount to U.S. peers. Advisors should stay constructive on cyclicals and quality growth while monitoring cheap hedging costs as a tactical opportunity to add protection ahead of key August data.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Sectors Risk On · Style Growth · Hedging Neutral

Snapshot retrieved Aug 8, 2026, 11:32 a.m. EDT · source dates vary

SectorsRisk On
StyleGrowth
HedgingNeutral

Inputs used

S&P 5007,757.64+3.58% 1W
TSXData unavailableNo verified feed
Nasdaq26,690.62+5.19% 1W
Russell 2000Data unavailableNo verified feed
VIX15.15-1.94 pts 1W
§ 04

Sectors

15 points

Cyclical

  • Financials leadership Bank stocks continued to outperform on firming net interest margin expectations, with J.P. Morgan noting 'earnings revisions in regional and money-center banks remain firmly positive' (J.P. Morgan, August 2026)
  • Energy steady Energy shares held gains as crude stabilized; Goldman Sachs sees producers 'generating durable free cash flow even at current price levels' (Goldman Sachs, late July 2026)
  • Industrials momentum Industrials remained near recent highs on reshoring and capex themes; Morgan Stanley maintains an Overweight citing 'a multi-year domestic manufacturing investment cycle' (Morgan Stanley, August 2026)
  • TSX cyclicals RBC Capital Markets highlights Canadian banks trading near 10.5x forward earnings versus roughly 13x for U.S. peers, calling it 'a valuation gap that looks increasingly hard to justify' (RBC Capital Markets, August 2026)
  • Positioning Bank of America stays Overweight financials and industrials, Neutral energy, citing 'cyclical breadth that has broadened beyond mega-cap tech' (Bank of America, August 2026)

Defensive

  • Utilities Sector lagged the broader tape as bond yields firmed modestly; TD Securities notes utilities 'remain a relative laggard while growth assets absorb flows' (TD Securities, August 2026)
  • Healthcare Mixed performance with pharma strength offset by managed care softness; Wellington Management flags 'idiosyncratic stock stories rather than a coherent sector trend' (Wellington Management, late July 2026)
  • Consumer Staples Valuations remain compressed versus the broader market; Fidelity notes staples trading 'near the cheapest relative multiple in several years' (Fidelity, August 2026)
  • REITs Rate-sensitive real estate names underperformed as long yields ticked higher; CIBC sees the group 'still working through a higher-for-longer discount rate' (CIBC, August 2026)
  • Signal Defensive underperformance across utilities, staples, and REITs points to a continued risk-on regime rather than a rotation to safety

Technology

  • Magnificent 7 Mega-cap technology names extended gains on continued AI capex commentary, contributing meaningfully to NASDAQ Composite strength above 26,690
  • AI narrative BlackRock Investment Institute reiterates that 'AI infrastructure spending remains the dominant driver of large-cap earnings durability' (BlackRock, August 2026)
  • Valuation UBS notes mega-cap tech trading at a premium to its five-year average forward P/E, but argues the premium is 'still supported by earnings growth differentials versus the broader index' (UBS, August 2026)
  • Earnings momentum Citi points to continued upward earnings revisions across large-cap software and semiconductor names into the back half of 2026 (Citi, August 2026)
  • Positioning Deutsche Bank stays Overweight technology and communication services, calling the group 'the clearest source of durable earnings growth in the index' (Deutsche Bank, August 2026)
§ 05

Style

10 points

Growth vs value

  • Relative performance Growth continued to outpace value on a weekly basis, driven by mega-cap technology strength within the NASDAQ Composite
  • Valuation spread Goldman Sachs notes the growth-value forward P/E spread remains above its trailing 10-year average, though 'not yet at extremes seen in prior cycles' (Goldman Sachs, August 2026)
  • Earnings differential J.P. Morgan highlights that consensus earnings growth for growth-cohort names continues to outpace value by a wide margin into 2027 estimates (J.P. Morgan, August 2026)
  • Canadian context National Bank notes the TSX's structural value and financials tilt has helped Canadian equities keep pace with U.S. growth-led gains this year (National Bank, August 2026)
  • Institutional calls Barclays recommends a barbell approach, 'staying long quality growth while adding selectively to cyclicals trading at a discount' (Barclays, August 2026)

Size & quality

  • Large vs small Large-cap benchmarks continued to outperform smaller-cap peers, with strategists citing balance-sheet strength and financing cost advantages
  • Quality factor Wellington Management notes quality factor momentum remains intact, favoring 'companies with stable margins and lower leverage in a still-uncertain rate environment' (Wellington Management, August 2026)
  • Small cap risk Scotiabank flags that smaller-cap issuers remain more sensitive to financing costs, with earnings breakeven ratios 'still elevated relative to pre-2022 norms' (Scotiabank, August 2026)
  • Canadian context BMO Capital Markets sees selective opportunity in the TSX Completion Index, noting mid-cap industrials 'screen attractively on both valuation and earnings revisions' (BMO Capital Markets, August 2026)
  • Positioning Mackenzie Investments maintains a quality tilt within core equity allocations, favoring large-cap balance sheet strength over small-cap beta (Mackenzie Investments, August 2026)
§ 06

Hedging

10 points

Volatility

  • VIX regime VIX at 15.15 remains in the normal regime, little changed on the week and well below long-term historical averages
  • Term structure The VIX futures curve remains in contango, a signal UBS describes as consistent with 'a market pricing calm rather than stress into the fall' (UBS, August 2026)
  • Options positioning Put/call ratios remain near neutral levels, with no evidence of aggressive hedging demand building into month-end
  • Protection cost Bank of America notes that with implied volatility subdued, 'the cost of near-term downside protection remains historically cheap' (Bank of America, August 2026)
  • Institutional view Morgan Stanley cautions that low realized volatility can mask complacency, recommending investors 'use current pricing to add protection rather than wait for a catalyst' (Morgan Stanley, August 2026)

Tactical

  • Cash allocation Fidelity recommends staying largely deployed given the normal volatility regime, while keeping modest dry powder for opportunistic entries (Fidelity, August 2026)
  • Collar strategies For concentrated single-stock positions in mega-cap tech, T. Rowe Price suggests collars remain 'an efficient way to lock in gains without fully exiting exposure' (T. Rowe Price, August 2026)
  • Cross-asset Stock/bond correlation has remained modestly negative in recent weeks, preserving the traditional diversification benefit of core fixed income
  • Tail risk Credit spreads remain near multi-year tights, and the MOVE index has stayed subdued, indicators that HSBC calls 'consistent with an absence of acute systemic stress' (HSBC, August 2026)
  • Rebalancing With equities outperforming fixed income year to date, advisors should check for drift above target equity weights and consider trimming into strength
§ 07

Institutional views

11 institutions

Institutional Perspectives

Goldman Sachs

David Kostin

bullish
S&P 500 Target: 8,200
Key Call: Continued earnings breadth across cyclicals and mega-cap tech supports further upside into year-end

Morgan Stanley

Mike Wilson

neutral
S&P 500 Target: 7,600
Key Call: Stretched positioning and low volatility warrant tactical hedging even as the primary trend stays constructive

J.P. Morgan

bullish
S&P 500 Target: 8,100
Key Call: Positive earnings revisions in financials and technology underpin above-consensus index targets

Bank of America

Savita Subramanian

neutral
S&P 500 Target: 7,800
Key Call: Overweight financials and industrials, neutral energy, cheap hedging costs favor adding downside protection

RBC Capital Markets

bullish
S&P 500 Target: 7,950
Key Call: Canadian banks trading at a rare discount to U.S. peers represent an attractive relative value entry point

TD Securities

neutral
S&P 500 Target: 7,700
Key Call: Defensive sectors remain a relative laggard as flows continue to favor growth and cyclical exposure

UBS

bullish
S&P 500 Target: 7,950
Key Call: Mega-cap technology premium remains justified by earnings growth differentials versus the broader index

Barclays

Venu Krishna

neutral
S&P 500 Target: 7,700
Key Call: Barbell approach recommended, staying long quality growth while selectively adding discounted cyclicals

Deutsche Bank

Bankim Chadha

bullish
S&P 500 Target: 8,300
Key Call: Overweight technology and communication services as the clearest source of durable earnings growth

BlackRock

neutral
S&P 500 Target: 7,900
Key Call: AI infrastructure spending remains the dominant driver of large-cap earnings durability into 2027

Nomura

neutral
S&P 500 Target: 7,750
Key Call: Global equity flows remain supportive but sensitive to any upside surprise in U.S. inflation data
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • Sector tilt: Maintain modest overweight to financials for income and valuation support, while trimming REIT exposure given persistent rate sensitivity
  • Factor: Emphasize quality and low-volatility names with stable margins, consistent with Wellington Management's quality-factor guidance
  • Hedging: Use current low-cost implied volatility to add index put protection or collars around concentrated positions
  • Canadian: Favor TSX financials for yield and relative valuation, keeping overall Canada/U.S. equity mix close to long-term policy weights

Balanced

  • Sector tilt: Core exposure to financials and industrials, satellite allocations to select technology names benefiting from AI capex trends
  • Factor: Blend growth and value, leaning slightly toward growth given earnings momentum while monitoring value's valuation gap
  • Hedging: Maintain moderate protection via partial index hedges given contango-supported cheap volatility pricing
  • Canadian: Consider a partial currency hedge on U.S. dollar exposure given narrowing rate differentials

Growth

  • Sector tilt: Full cyclical exposure across financials, industrials, and technology, consistent with broadening earnings breadth
  • Factor: Tilt toward growth and momentum, with selective quality overlay to manage concentration risk in mega-cap tech
  • Hedging: Tactical use of options structures to protect concentrated AI-related gains without fully reducing exposure
  • Canadian: Increase international and U.S. large-cap tech allocation relative to TSX given the index's more limited technology weighting
§ 09For the conversation, not the committee

Client talk track

Stocks kept climbing this week, with bank and industrial companies leading the way alongside big tech names, and market calm stayed near its steadiest levels in years.

Is the market getting too calm and confident for its own good?

Calm markets are normal right now, though one major firm is watching for stretched positioning as we head into September.

Should I still be comfortable owning tech and bank stocks?

Both groups have been leading gains this week, so nothing about that picture has changed for now.

Is this a good time to add some protection to my portfolio?

The cost of protection is unusually cheap right now, which is worth a conversation if you'd like some extra cushion.

Bottom lineThe conversation to have this week is whether to stay the course on cyclical and growth stocks, which continue to lead, or to use today's cheap protection costs to add some cushion ahead of key economic data in August. This is a discussion, not a change in direction.

§ 10

Key dates

5 events

Key Dates Ahead

DateEventRelevance
August 12U.S. CPI (July)Key input for Fed rate path expectations and equity valuation multiples
August 13U.S. PPI (July)Additional read on pipeline inflation pressures ahead of September FOMC
August 14U.S. Retail Sales (July)Consumer spending signal relevant to discretionary and financials earnings outlook
August 18-19Mega-cap retail earnings (Walmart, Home Depot)Bellwether read on consumer health heading into fall
August 21Monthly options expirationPotential for elevated intraday volatility around large open interest strikes
§ 11

Sources

21 sources

Sources & References

  • Goldman Sachs
    US Weekly Kickstart
    August 2026
  • Morgan Stanley
    Weekly Warm-up: Equity Strategy
    August 2026
  • J.P. Morgan
    Equity Strategy Weekly
    August 2026
  • Bank of America
    US Equity Strategy Weekly
    August 2026
  • RBC Capital Markets
    Canadian Bank Valuation Update
    August 2026
  • TD Securities
    Equity Strategy Weekly
    August 2026
  • UBS
    Global Equity Strategy
    August 2026
  • Barclays
    US Equity Strategy Notes
    August 2026
  • Deutsche Bank
    US Equity Strategy Update
    August 2026
  • BlackRock
    Weekly Market Commentary
    August 2026
  • Nomura
    Global Equity Strategy Weekly
    August 2026
  • Wellington Management
    Quality Factor Perspectives
    late July 2026
  • Fidelity
    Market Sector Update
    August 2026
  • CIBC
    REIT and Rate-Sensitive Sector Note
    August 2026
  • Scotiabank
    Small Cap Credit Sensitivity Note
    August 2026
  • BMO Capital Markets
    TSX Completion Index Review
    August 2026
  • Mackenzie Investments
    Equity Factor Positioning
    August 2026
  • National Bank
    TSX vs S&P Style Comparison
    August 2026
  • T. Rowe Price
    Concentrated Position Hedging Strategies
    August 2026
  • HSBC
    Cross-Asset Risk Monitor
    August 2026
  • Citi
    US Equity Earnings Revisions Tracker
    August 2026