Investors certainly brought out the box cutters on Monday, taking down the stocks of most of the significant corrugated packaging companies. While the S&P 500 and other market indexes started off the week with better than 1% gains, packaging companies saw their stocks drop on average around 5% amidst higher volume. While the largest packaging company, International Paper (NYSE:IP), suffered the worst with a 6.4% drop, number two player Smurfit-Stone (Nasdaq:SSCC) got off relatively lightly with a nearly 3% decline.
No Mystery As to Why
The reason for the drop was pretty straightforward. An industry journal, Pulp and Paper Week, reported that a price hike implemented by the industry in August has not held up, and prices have settled back to the former level. Not only will that pricing adjustment trigger some customer rebates, it also will take a meaningful chunk of out the sector's forward earnings prospects, as these companies are presently profitable and a fair bit of that price hike should have flowed to the bottom lines.
The full article can be found at the following link:
http://stocks.investopedia.com/stock-analysis/2010/Packaging-Getting-Boxed-In-IP-SSCC-PKG-TIN-WY-FOR0923.aspx
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