Some of the market’s more beaten-down names may have further to fall as investors start cutting their losses to save on taxes, according to Morgan Stanley. Stocks have reached new highs this year, with the gains largely powered by tech companies and demand for artificial intelligence. Still, many were left out of the rally. Now, with the end of the year approaching, investors are assessing their winners and losers. “A common point of discussion heading into 4Q (when the taxable year ends for many investors) is which stocks might be subject to a bit of extra selling pressure as investors look to harvest tax losses,” Morgan Stanley equity strategist Michelle Weaver said in a note Monday. When selling their losing stocks, investors can use their losses to offset capital gains — known as tax loss harvesting. The move can help them reduce their tax bills. In addition, if the losses exceed capital gains, investors may use up to $3,000 of the losses to offset ordinary income on their federal tax return. They can carry over the remainder to future years. What they can’t do is sell and then buy the same security within 30 days of one another, known as the “wash sale rule.” Candidates for tax-loss selling To find names that could be candidates for tax-loss selling, Morgan Stanley first looked at stocks likely favored and widely held by investors earlier in the year. Then it narrowed that list down to those had absolute price returns sufficient to generate a meaningful tax loss. For the first part, Weaver screened for S & P 1500 stocks in the top quintile of average analyst ratings on Jan. 15 in order to allow some time after the first of the year for deployment of capital. She then looked for names that dropped by at least 10% from that mid-January date through the end of the third calendar quarter. In addition, she refined her results by removing any stocks that fell more than 25% during that same time period, since those with bigger drops tend to show a rebound in the fourth quarter. Here are some of the names that made the cut. Wyndham Hotels & Resorts has lost more than 21% so far this year. In July, the hospitality company said softer demand led to a 2.3% year-over-year decline in U.S. revenue per available room, or RevPar, in the second-quarter. Wyndham is set to report third-quarter results on Oct. 22. Meanwhile, Halliburton ‘s stock is down 12% year to date. The oilfield services company forecast a steep decline in full-year revenue when it reported second-quarter earnings in July. “What I see tells me the oilfield services market will be softer than I previously expected over the short to medium term. We will of course take action to address this near term softness, and we remain fully committed to our shareholder returns framework,” CEO Jeff Miller said in a statement at the time. Halliburton is expected to release its third-quarter earnings on Oct. 21. Shares of Adobe saw a lift in mid-September after the computer software giant reported fiscal third-quarter results that topped expectations . Still, it wasn’t enough to lift the stock out of its slump. Shares are down nearly 21% so far this year. ADBE YTD mountain Adobe year to date In late September, Morgan Stanley downgraded Adobe to equal weight from overweight, citing the company’s decelerating digital media annual recurring revenue. “Direct ‘Gen AI’ monetization has lagged initial investor (and our) expectations, explained by Adobe’s propensity to foster ubiquity and broad adoption of the technology ahead of monetization,” analyst Keith Weiss wrote in a Sept. 24 note. In addition, there’s some uncertainty in a sizable portion of Adobe’s annual recurring revenue base where he lacks confidence that Gen AI advances will be a net positive, he said. (Learn the best 2026 strategies from inside, the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here .)
