SDI Productions
The consumer staples sector fell on Wednesday after the producer price index declined 0.5% for December after economists had predicted a drop of just 0.1%. Many consumer staples companies are benefiting from high pricing that may have to be reeled in if consumers tighten and inflation retreats further. The PPI read combined with a soft retail sales report ratcheted up recession fears and pushed traders to price in a 94% probability that the Federal Reserve will only increase interest rates 0.25% at the next FOMC meeting on January 31-February 1.
Packaged food stocks in particular were sent reeling with Beyond Meat (BYND) -5.33%, Kraft Heinz (KHC) -5.14%, WestRock Coffee (WEST) -4.21%, Seneca Foods Corporation (SENEA) -4.07%, Hain Celestial (HAIN) -4.06%, Conagra Brands (CAG) -3.99%, and Campbell Soup (CPB) -3.33% all lower.
Beverage giant PepsiCo (PEP) -1.88% and Coca-Cola (KO) -1.67% also fell more than broad market averages.
Household product stocks Church & Dwight (CHD) -2.35%, Procter & Gamble (PG) -2.11%, and Clorox (CLX) -2.05% also were in reverse in mid-day trading.
Some analysts think the selling pressure on consumer staples may be early with a tough macroeconomic road ahead and the group still seen as a defensive play despite valuation concerns.
See the consumer staples stocks with the highest Seeking Alpha Quant Ratings.