May 23, 2026, 11:56 AM EDT. RBC Capital Markets projects the S&P 500 could rise about 7.7% over the next 12 months, reaching a target of 7,900. However, the firm warns of possible short-term setbacks, expecting any pullback to be limited to 5%-10%. A more severe decline of 14%-20% would likely require renewed recession fears. RBC's forecast factors in strong growth in artificial intelligence sectors, geopolitical tensions especially in the Middle East, 3.3% consumer inflation, stable Federal Reserve rates, and a 4.5% yield on 10-year Treasuries. Risks include earnings revisions, semiconductor profit-taking, U.S. midterm election uncertainty, and rising interest rates that may pressure equity valuations. RBC favors Growth stocks over Value, with a preference for U.S. equities over international markets.