RBC Capital Markets strategists, led by Lori Calvasina, are warning that the S&P 500 could drop between 5% and 10% in the coming weeks, citing September’s seasonal weakness and midterm election uncertainty as key headwinds. September has produced declines in five of the past ten years, and betting markets are pricing in a higher probability of a Democratic sweep at the November 3 midterms, a scenario the firm views as less favorable for equities in the near term. Despite this warning, the firm maintained its 12-month S&P 500 price target at 8,150 points, implying roughly 6% upside from current levels. Key risk factors to monitor include the midterm election outcome, Federal Reserve interest rate policy, and geopolitical tensions tied to the unresolved Iran conflict.
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