Strong corporate earnings are keeping the stock market afloat even as concern grows that the Federal Reserve may raise interest rates, according to a strategist at one of North America's largest banks. But she warned that there are limits to how much the market can absorb.
Lori Calvasina, head of US equity strategy research at RBC Capital Markets, made the comments on Bloomberg Television's Surveillance program. According to Bloomberg, she said the strength of US corporate earnings is currently propping up stocks despite the rate environment, but added that there are limits to how many hikes the market can withstand.
The Federal Reserve has kept markets on edge in recent months as investors try to read whether policymakers will move to raise borrowing costs further. Higher interest rates generally put downward pressure on stock valuations, particularly for growth-oriented companies, because they raise the cost of capital and reduce the present value of future earnings.
Calvasina's position is that earnings strength is acting as a buffer for now. Corporate profits across a range of sectors have come in better than expected, giving investors a reason to hold equities even as the rate picture remains uncertain. That dynamic, she suggested, has room to continue, but only if rate increases stay limited in number.
The warning that stocks cannot weather too many hikes reflects a broader tension in markets heading into the second half of 2026. Investors are weighing whether the economy is strong enough to justify higher rates without tipping into a slowdown that would erode the very earnings that are currently supporting prices.
No specific number of rate hikes was cited as the threshold in the available comments, but the direction of Calvasina's argument points to a market that is holding steady rather than building momentum. The durability of that position depends largely on whether the Fed moves once or several times in the months ahead.
