Investing.com -- RBC Capital Markets made a series of S&P 500 sector rating changes, upgrading Technology to overweight and Consumer Discretionary to market weight while downgrading Communication Services and Utilities, designating Tech as its preferred growth-oriented sector heading into the second half of 2026.

Strategist Lori Calvasina said Tech was upgraded partly because "it is difficult to be constructive on the S&P 500 in the year ahead without taking a constructive view on it," given the sector accounts for more than a third of the index's market capitalization.

RBC cited strong upward EPS and revenue revision trends, recovering inflows and a positive performance outlook score among its U.S. Tech analysts as supporting the upgrade. Valuations, while not cheap, are described as "only slightly above the long-term average on median absolute and relative P/E."

Communication Services was downgraded to market weight from overweight after weakness emerged in EPS revisions and a negative performance outlook score in RBC's latest analyst survey.

Consumer Discretionary was lifted to market weight from underweight, with Calvasina noting that negative views on consumer-oriented sectors represent one of the pain trades in U.S. equities."

She added that sentiment survey data has shown "some signs of attempted stabilization."

Utilities was cut to underweight, which RBC attributed to it being "one of the most expensive sectors in the S&P 500," a neutral analyst performance outlook, and weak recent fund flows.

RBC maintained its 12-month S&P 500 price target of 8,150 and said it is "on guard for a shift back into traditional mega cap Growth leadership."