MW Why history shows this year's stock losers can be November winners

By Jamie Chisholm

A tax-loss trade sets up some stocks for better times, according to Evercore ISI

Losers can turn the tables

Investors are starting the week feeling chipper, with sentiment bolstered by talk of a U.S. - China trade deal.

Adding that to optimism about big tech earnings in coming days, a reasonably healthy U.S. economy, and expectations the Federal Reserve will cut interest rates on Wednesday, means the S&P 500 SPX is likely to register its 35th record high of the year.

However, as analysts at Evercore ISI led by Julian Emanuel point out, even though the Russell 3000 RUA is up 15% in 2025, a similar amount to the S&P 500, there are still 48% of the broader index's constituents that are down year-to-date. History shows the proportion of RUA losers would more likely be 35% given the index's gains, according to Evercore.

Indeed, only 27% of Russell 3000 constituents are up no more than 10% from the post-Liberation Day market trough on April 7, while the index as a whole has rebounded 41% off that low, Evercore calculates. In fact, 16% of the Russell 3000 members are still south of their April trough, and below is a table of losers by sector.

This all "drives home the point that equity investing is as much about 'a market of stocks', as it is 'the stock market'," says Evercore.

And it means that the high proportion of stocks underwater for the year likely makes the mutual fund tax loss season carry greater heft going into the October 31 fiscal year end.

Recall, tax-loss harvesting is a tax strategy in which stocks are sold at a loss to offset capital gains, thereby reducing tax liability. Note: the second tax-loss harvest, for retail investors, occurs mainly in December.

Now, this harvesting can clearly put additional downward pressure on already badly performing stocks. Evercore, though, finds that this means the tax-loss tactics can have a notable positive impact on what happens after October 31.

"Since 1990, the worst performing quintile of Russell 3000 constituents in January through October of the respective year has shown a tendency to outperform during November as incremental selling pressure is alleviated - bouncing 2.7% on average," says Evercore.

This historical trend therefore offers opportunity for traders to secure some above-market gains.

Evercore screened the Russell 300 for what it calls 'Tax Loss Tacticians' - stocks that have recently done particularly badly versus the market and their own year-to-date average prices, but which Evercore rates neutral to attractive.

This produced stocks that are tax harvesting candidates and possible outperformers over the following month. Of their large list, the top 20 by market value are: UnitedHealth $(UNH)$, Accenture $(ACN)$, Adobe $(ADBE)$, Comcast $(CMCSA)$, UPS $(UPS)$, ONEOK $(OKE)$, Target (TGT), Kraft Heinz $(KHC)$, Kenvue $(KVUE)$, General Mills $(GIS)$, Constellation Brands $(STZ)$, lululemon athletica (LULU), Gartner (IT), GoDaddy $(GDDY)$, Centene $(CNC)$, International Flavors & Fragrances $(IFF)$, Dow, LyondellBasell $(LYB)$, Deckers Outdoor (DECK), and DocuSign $(DOCU)$.

The markets

U.S. stock-index futures (ES00) (YM00) (NQ00) are higher as benchmark Treasury yields BX:TMUBMUSD10Y nudge up. The dollar index DXY is lower, while oil prices (CL.1) dip and gold futures (GC00) are trading around $4,052 an ounce.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              6791.69    1.92%   2.23%   15.47%   16.93% 
   Nasdaq Composite                                                     23,204.87  2.31%   3.21%   20.17%   25.31% 
   10-year Treasury                                                     4.025      4.20    -11.90  -55.10   -26.10 
   Gold                                                                 4050.7     -7.40%  4.86%   53.48%   47.04% 
   Oil                                                                  60.87      6.92%   -3.66%  -15.31%  -10.50% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

A very busy week includes earnings from five of the Mag. 7 - Meta $(META)$, Microsoft $(MSFT)$, Alphabet $(GOOGL)$, Amazon (AMZN) and Apple $(AAPL)$ - and central bank policy decisions in the U.S. Japan and eurozone.

President Donald Trump said he would add another 10% to Canada tariffs because he was still annoyed by an advert featuring former president Ronald Reagan.

Novartis (CH:NOVN) $(NVS)$ has agreed to buy Avidity Biosciences (RNA) for about $12 billion.

Japan's Nikkei 225 stock index JP:NIK rose above 50,000 for the first time bolstered by a weaker yen and hopes the new government will boost growth.

Trump ally Argentine President Javier Milei won a big victory in national midterm legislative elections.

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The chart

Source: Bianco Research

For those wondering why consumer sentiment indicators are so miserable while the stock market is at a record high, here's a chart from Jim Bianco of Bianco Research. "For most of the public, they no longer see the stock market as a barometer of the economy," he says.

The change occurred after COVID, as perceptions of the stock market shifted, according to Bianco. The bottom panel shows the rolling correlation of sentiment and stock market at its most negative ever.

"This means that rising stock prices no longer make the 'average' person feel better about the economic outlook, as was almost always the case for the 50 years leading up to 2020," Bianco adds.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   BYND    Beyond Meat 
   NVDA    Nvidia 
   GME     GameStop 
   TSLA    Tesla 
   AMD     Advanced Micro Devices 
   TSM     Taiwan Semiconductor Manufacturing 
   PLTR    Palantir Technologies 
   AMZN    Amazon.com 
   AAPL    Apple 
   NIO     NIO 

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October 27, 2025 06:41 ET (10:41 GMT)

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