Countdown to 2025: Stocks Poised for a Rebound
As the trading days of 2024 dwindle, investors are shifting their focus to the new year. With Christmas and Hanukkah coinciding this year, the markets are expected to thin out, making it an ideal time to reassess portfolios.
Tax-Loss Selling: A Silver Lining for 2025
A team of strategists at Evercore ISI, led by Julian Emanuel, has identified a group of stocks that could benefit from tax-loss selling. These “tax-loss targets” have declined by 20% or more year-to-date and 50% or more since the end of 2021. Emanuel believes that small-capitalization stocks, in particular, could see a significant rebound in 2025.
Russell 2000: A Potential Winner
The Russell 2000 index has lagged behind its peers since 2022, making it an attractive target for investors. With smaller and low-momentum stocks tend to outperform in January, Emanuel expects the Russell 2000 to benefit from a potential “Santa Claus rally.”
Stock Picks for 2025
Emanuel and his team have flagged several stocks across the Russell 3000 index that could see a rebound in 2025. These include Nike, ZoomInfo Technologies, Avis Budget, Cleveland-Cliffs, and StoneCo. While these stocks have struggled in 2024, they have the potential to turn around in the new year.
A Word of Caution
MarketWatch’s Mark Hulbert notes that investors selling tax losers can miss out on any potential bounce. He suggests a workaround to capitalize on the tax-loss selling phenomenon.
Market Performance
The Nasdaq Composite is rising in early trade, with smaller gains for the S&P 500. The Dow industrials are struggling, following Friday’s rebound. Key asset performance is as follows:
- S&P 500: -1.99% last 5 days, 24.34% year-to-date
- Nasdaq Composite: -1.78% last 5 days, 30.39% year-to-date
- 10-year Treasury: 4.527, up 12.20 basis points
- Gold: 2645.1, down 0.94%
- Oil: 69.79, down 1.20%
Other Market News
Honda and Nissan are in talks for a merger, while Rumble’s stock is soaring after a $775 million investment from Tether. Novo Nordisk shares are rebounding after a recent selloff. The Conference Board’s Confidence Survey is due later today.
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