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Tyson tops S&P 500 Consumer Staples in August as strong Q3 hoses down plant fire

The S&P 500 Consumer Staples Index booked a 1.8% gain in August, surpassing the overall S&P 500 Index that recorded a negative return of 1.6%, according to data compiled by S&P Global Market Intelligence.

The Consumer Staples sector maintained its spot as the third-best performing S&P 500 index for the second consecutive month. It is also one of the only three S&P 500 indices to record gains in August, alongside the S&P 500 Utilities and Real Estate indices.

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A total of 22 out of the 33 constituents of the S&P Consumer Staples Index recorded positive returns during the month.

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Tyson Foods Inc. emerged as the best-performing stock with a 17.5% total monthly return, despite a fire incident that partly destroyed its Kansas beef plant Aug. 9. Four days before the fire, Tyson's stock rose as much as 9.9% after recording $676 million in attributable net income for the fiscal third quarter, beating analyst expectations.

During an earnings call on Aug. 5, Tyson President and CEO Noel White told analysts that the meat company has been in touch with Chinese pork buyers as the Asian country plans to fill protein demand amid the African swine flu outbreak. Tyson's stock performance in August recovered from a 1.5% negative return in July.

Food retailer Kroger Co. also fared well in August, recording a 12.7% return. It comes as the company unveiled new retail initiatives including the rollout of hemp-derived cannabidiol lotions, oils and creams in its Texas stores and the expansion of its experimental store format with pharmacy chain Walgreens Boots Alliance Inc. Kroger's stock also bounced back in August after being the fourth-worst performing consumer staples stock in July with a 2.5% negative return.

Campbell Soup Co. was the third-best performer among the constituents of the S&P Consumer Staples Index with a total monthly return of 8.9%. The company's stock jumped as high as 10.9% on Aug. 30 after the maker of soup and snacks reported results for its fiscal fourth quarter, the first time U.S. sales for its namesake business returned to growth since the second quarter of 2017. At the start of the month, Campbell announced its $2.2 billion deal to sell its Australian cookie brand Arnott's Biscuits Ltd. and some other international assets to private equity firm KKR & Co.

Meanwhile, The Kraft Heinz Co. was the worst-performing Consumer Staples stock in August with a 19% negative return. The packaged food producer on Aug. 8 withdrew its guidance for its 2019 fiscal year as CEO and Interim President of the U.S. zone Miguel Patricio said he is working on developing a new strategic plan. Kraft Heinz wrote down the value of several business units by another $1.22 billion, six months after the $15.44 billion write-down of major brands such as Oscar Mayer and Kraft Natural Cheese.

On Aug. 13, Kraft Heinz disclosed in an SEC filing that it will slash about 400 jobs as part of its global restructuring. Two days later, the company and Mondelez International Inc. were fined $16 million to settle claims that they manipulated wheat prices in their favor mid-2011. For the year through Aug. 30, Kraft Heinz's stock plummeted 41.12%.

Cigarette-maker Philip Morris International Inc. was the second-worst performer across the sector with a 13.8% negative return on the news that it is in discussions with Altria Group Inc. for an all-stock merger of equals. The deal would create a $195 billion tobacco giant and reunite the two companies following their separation in 2008, but it has received a lukewarm response from investors, with U.S. federal authorities' ongoing crackdown on e-cigarettes a key concern.

Altria owns a stake in e-cigarette company Juul Labs Inc., which has been a target for increasingly aggressive regulators. In August, the U.S. Food and Drug Administration, the Centers for Disease Control and Prevention, and the U.S. House of Representatives all launched their own investigations into e-cigarettes.

Altria was also among the lowest S&P 500 Consumer Staples stocks with a negative return of 7.1% during the month.

Coty Inc., the worst-performing Consumer Staples stock in July, was the third-worst performer in August with a 12.5% negative return. Since it launched its four-year turnaround plan on July 1, the Covergirl parent's stock fell 17.60% through Aug. 30 at $9.55. On Aug. 28, Coty said it will sell its 60% stake in beauty and cosmetics company Younique LLC back to its founders "as soon as practicable" in order to "focus on their respective strengths."

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Across the wider S&P 500 Index, the energy sector saw the biggest slump in August with a negative return of 8.1%. It was followed by the financial sector that saw a negative return of 4.8%.

Target Corp. was the best performing stock in the index with a 24.8% total monthly return as the big-box retailer reported fiscal second-quarter earnings that exceeded analysts' expectations. Net earnings for the quarter rose 17.4% year over year to $938 million.