ConocoPhillips, KKR, and Wyndham Stock Could Have a Rough October

Wyndham Hotels stock has fallen 20% in 2025. (Angus Mordant/Bloomberg)

Key Points

• Morgan Stanley warns that stocks prone to tax-loss selling typically underperform the market by nearly two percentage points in October.
• For 2025, Morgan Stanley identified 96 S&P 1500 stocks that declined at least 10% between mid-January and September 30, excluding those down 25% or more.
• The list of at-risk stocks includes energy companies like ConocoPhillips, financial firms such as KKR, and healthcare names like Becton Dickinson.

Stocks like ConocoPhillips , KKR and Wyndham Hotels have had a bad year. Things could get worse before they get better, Morgan Stanley warns.

The stock market just entered the final stretch of 2025, and so far things have turned out pretty well. The S&P 500 recorded a record high Wednesday, its 29th of the year. All in all, the index is up about 14% year to date.

If those gains hold up, that means there are plenty of investors who bought low and sold high in 2025, putting them in line for capital-gains tax bills. One popular way to minimize capital gains is to register capital losses, typically by selling investments that are underwater.

As a result, stocks that have spent much of the year in the red often face additional selling pressure during the final weeks of the year as tax-sensitive investors look to unload them. The good news: The same stocks typically enjoy a boost at the start of the following year, as investors repurchase them.

Still, the temporary effect can be significant: Morgan Stanley says stocks at risk for tax-loss selling typically lag the market by nearly two percentage points in October, when the most dramatic underperformance occurs.

That means, for short-term traders, the stocks could be tempting candidates for so-called short bets. In a short sale, an investor borrows and then sells a stock, in a bet that it will fall. If successful, the trader can buy back the shares at a lower price and then return them, pocketing the difference.

For long-term investors, however, an October dip could provide an attractive entry point.

For 2025, Morgan Stanley identified 96 names from the S&P 1500 that have seen declines of at least 10% between mid-January and Sept. 30. Morgan Stanley chose mid-January in an attempt to focus on stocks investors bought shortly after the start of the year. Morgan Stanley also excluded stocks that had seen price drops of 25% or more, since history suggests these often rebound at the end of year.

As you might guess, Morgan Stanley identified plenty of names from the underperforming energy industry and just one from utilities, a sector that has outperformed the market. Energy stocks include ConocoPhillips, Diamondback Energy, Halliburton, Schlumberger, and Targa Resources.

The lone utility is PG&E , the California power company, whose share price has been laboring as a result of liability concerns tied to recurring California wildfires. Shares of PG&E are down 23% year to date.

Plenty of financial stocks also found their way onto the list, including KKR, Jefferies, and Reinsurance Group of America. KKR, down 17% in 2025, may be something of a victim of its own success. Investors have worried that a slowdown in private equity deals makes it harder to justify the stock’s valuation, which began the year significantly above that of the broader market.

Also on the list are many names from the struggling healthcare sector, including Becton Dickinson, Danaher, and West Pharmaceuticals. Among consumer names are Lithia Motors, Crocs, Wyndham Hotels & Resorts , and Andersons.