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Consumer staples stocks underperform S&P 500 in September

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Consumer staples stocks underperform S&P 500 in September

The S&P 500 consumer staples index booked a 1.7% gain in September, underperforming the broader S&P 500 index, which rose 1.9% during the month, according to data compiled by S&P Global Market Intelligence.

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The consumer staples sector was the sixth-worst performer across the S&P 500 in September. Overall, the S&P 500 fared better in September compared to the loss of 1.6% in August.

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Of the 33 constituents of the S&P 500 consumer staples index, 10 suffered falls in their share prices while two recorded double-digit gains.

Brewer Molson Coors Brewing Co. emerged as the best-performing stock across the Consumer Staples segment with a 12% rise. Molson Coors-owned MillerCoors LLC won its legal battle against rival Anheuser-Busch InBev SA in September after a federal judge from Wisconsin banned AB InBev's Anheuser-Busch unit from publishing advertisements that targeted MillerCoors' Miller Lite and Coors Light beer brands.

Beauty products maker Coty Inc., the third-worst performer in August, bounced back to the top of the sector and registered an 11.4% gain in September. It comes as the Covergirl owner on Aug. 28 released its guidance for fiscal year 2020, projecting a 5% to 10% year-over-year increase in adjusted operating income and mid-single-digit growth in adjusted EPS. The company's adjusted EPS of 65 cents for fiscal year 2019 surpassed a mean consensus of analysts' estimates of 64 cents, according to Market Intelligence.

The Kraft Heinz Co., the worst-performing consumer staples stock in August, also redeemed itself in September as it recorded a 9.5% gain, making it the third-best performer across the sector. The packaged food producer beefed up its capital during the month, offering to purchase in cash $900 million of its 2020 notes and another $2.5 billion senior notes with varying maturity dates.

Meanwhile, Tyson Foods Inc. crashed the hardest in September with a negative return of 7.4%, just a month after it topped the S&P 500 consumer staples index with a 17.5% jump. The meat processor was named in a class-action lawsuit involving 17 other chicken producers including JBS SA, Pilgrim's Pride Corp. and Perdue Farms Inc. Tyson and its peers were accused of conspiring to fix and reduce hourly wages paid to employees at their poultry processing facilities. None of the companies responded to requests for comment.

Household products maker Church & Dwight Co. Inc. was the second-worst performing consumer staples stock with a drop of 5.7%. The company's stock fell as much 12.7% after it came under scrutiny from short sellers. In response, Church & Dwight executives and directors, including President and CEO Matthew Farrell, have bought shares in the company.

Altria Group Inc. was the third-worst performer in September with a 4.6% drop. Altria and Philip Morris International Inc. called off plans to merge and instead decided to focus on Philip Morris' smoke-free tobacco-heating system IQOS in the U.S. It comes at a time when electronic cigarette companies, including Altria-backed Juul Labs Inc., face tighter regulations in the U.S. Juul CEO Kevin Burns stepped down Sept. 25 at what Altria Chairman and CEO Howard Willard described as a "critical time for the company."

The Wall Street Journal reported Sept. 24 that Juul was preparing to implement a staff restructuring that would include a hiring slowdown and the elimination of some jobs. Federal prosecutors in California have commenced a criminal investigation into the company, and the Federal Trade Commission reportedly is probing the company's marketing practices.

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Across the wider S&P 500 Index, the healthcare sector was the worst performer and the only sector to book a loss. The U.S. House of Representatives' impeachment inquiry into President Donald Trump, announced Sept. 24, sent healthcare stocks down as investors worry that the Democrats' Medicare for All proposals could eliminate private health plans. "This reaction is due to many investors believing impeachment of a Republican president will tip the balance of power," CFRA Research analyst Colin Scarola said in a note.

The S&P 500 financials index was the best performing sector with a 4.6% positive return, while Tapestry Inc. was the best-performing stock in the S&P 500 in September with a 28% gain. Electronic trading platform MarketAxess Holdings Inc. was the worst performer with a 17.6% decline.