S&P 500 laggards 2025: performance, tax‑loss angles and seasonal

The S&P 500’s bottom‑third performers in 2025 have fallen sharply, with many large‑cap names down more than 50% year‑to‑date, prompting traders to watch them for tax‑loss harvesting and possible mean‑reversion moves in early 2026 [1]. Analysts note that the laggard pool is deeper than usual, offering both risk and opportunity as investors consider short‑term strategies and the historic “laggards trade” pattern [3].

Key takeaways

• The average 2025 laggard is down 19% in absolute terms and 36% relative to the S&P 500, deeper than long‑term averages [3].
• Traders target these stocks for December tax‑loss selling and plan January mean‑reversion setups, monitoring volume spikes and short‑interest data [1].
• Historical data shows laggards from the prior year outperformed the index in Q1 of the following year in 14 of the past 23 years [3].
• Sectors most affected include Materials, Consumer Discretionary and Healthcare, while Energy and Industrials laggards held up better [3].
• Crypto assets such as BTC and ETH have shown inverse moves, with heightened correlation to equity risk‑off periods [1].

Year‑to‑date underperformance and trading angles

Charlie Bilello highlighted the worst‑performing S&P 500 stocks on December 1, 2025, pointing to large‑cap names that have suffered steep declines due to rising rates, supply‑chain issues and sector headwinds [1]. The list includes several consumer discretionary and technology companies that have lost over half their value YTD. Traders often use such laggard lists to generate tax‑loss selling pressure in December, then seek “January effect” mean‑reversion trades in January, watching closing‑auction volume spikes, short‑interest updates and options‑implied volatility skew to time entries and manage gap risk [1].

Goldman Sachs’ seasonal analysis reinforces the focus on laggards, noting that the average 2025 laggard is down 19% in absolute returns and 36% relative to the index, both worse than the long‑term averages of –17% and –28% [3]. The firm defines laggards as stocks in the bottom third of annual S&P 500 performers by share price, sector‑relative return or drawdown. While the pattern is not guaranteed, it has produced a robust edge in 14 of the past 23 years, with 53% of laggards outperforming the index in Q1 2025 after a poor 2024 performance [3].

Seasonal laggard‑to‑leader pattern and broader market context

The “laggards trade” rests on a historical tendency for beaten‑down names to become market leaders in the first quarter of the following year. Goldman’s data shows that after a weak 2024, the trend rebounded in 2025, with more than half of laggards beating the S&P 500 in Q1 [3]. This seasonal edge is especially relevant as investors consider reallocating capital after the year‑end tax‑loss harvesting window closes.

In parallel, the broader equity market has shown signs of recovery from geopolitical shocks. By early April 2026, the S&P 500 had recouped more than two‑thirds of its losses from the Iran‑related war, sitting just under 1% below its pre‑war level of 6,878.88 [2]. While equity sentiment improves, oil markets remain cautious, underscoring the divergent risk dynamics across asset classes.

Why it matters

The deep underperformance of 2025 S&P 500 laggards creates a dual‑sided opportunity: investors can harvest tax losses now and potentially capture upside if the historical mean‑reversion pattern holds in early 2026. Monitoring sector‑specific laggards, volume spikes, and short‑interest data will be crucial for timing trades and managing risk. At the same time, the inverse relationship between equity weakness and cryptocurrency activity suggests that broader market sentiment may continue to influence cross‑asset flows, adding another layer of consideration for portfolio managers.