# Excessive pessimism could set up a year-end US stock rebound, Carson strategist says

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/investing/42134
Published: 2026-10-27T23:40:37.000Z
Updated: 2026-10-27T23:40:37.000Z
Section: Investing

> Carson Group strategist Ryan Dietrich sees earnings growth, sector rotation and stable credit supporting US stocks into year-end, while flagging risks from heavy AI infrastructure spending.

Stable credit markets, sector rotation and earnings growth support the case for US stocks to strengthen into year-end, while heavy AI spending remains a risk, according to Ryan Dietrich, chief market strategist at Carson Group.

October weakness and widespread pessimism could provide the conditions for a rebound. Buying beyond technology shares and continued corporate earnings growth underpin that assessment.

In an October 27 interview with Anthony Pompliano, Dietrich pointed to seasonal patterns, credit conditions and broader market participation as reasons for his constructive outlook. He described pervasive bearishness as a potential contrarian signal.

Stocks have historically tended to weaken during roughly the first three weeks of October before forming a late-month low, Dietrich said. He also noted that hedge funds held their largest short positions in five years, while cautioning that seasonal patterns do not always hold.

Post-midterm performance provided another historical reference. Dietrich said the S&P 500 was higher one year after election day in each of the past 19 midterm elections, with an average gain of about 15%. Not every advance was substantial, he added, arguing that the pattern mattered more than which party won.

Credit markets were not showing clear signs of widespread stress, he said. Although credit default swaps on some large cloud companies and newer cloud providers raised concerns, high-yield credit spreads were not widening sharply. Broader credit conditions, in his assessment, did not suggest a systemic problem.

Dietrich also highlighted the breadth of gains during technology weakness. He cited sessions when 300 to 400 stocks rose despite declines in technology shares, and said software gained 6% in the preceding week. Strength in health care and consumer staples suggested that buying was rotating across sectors.

He did not regard the technology rally as exhausted, pointing to continued spending by large cloud companies and lower earnings multiples at some profitable, fast-growing businesses. His view that technology could lead again next year remained conditional: a breakdown in the sector would undermine his bullish case.

Earnings growth was another support for stocks, Dietrich said. Rising yields can compress valuation multiples, but stronger profits can still sustain index gains. He argued that continued earnings strength, coupled with improving confidence and higher multiples, could provide further support next year.

He nevertheless flagged the scale of AI infrastructure spending, cash-flow pressure and rising credit default swaps at some companies as concerns. His closing emphasis was on diversification across sectors as a way to limit exposure to the risks surrounding the technology spending cycle.