Good Evening. U.S. stocks interrupted a two-day rise to settle lower on Wednesday following a volatile last hour of trading in which the major averages attempted and failed to maintain slight gains.
The S&P 500 fell 0.20%, which was significantly less than its intraday loss of over 2%. The Dow Jones fell 0.14%, while the technology-focused Nasdaq Composite fell 0.25%.
ARE THEIR EARNINGS AS GOOD AS THEIR FOOD?
Lamb Weston (LW) surpassed earnings estimates and matched revenue forecasts, as the frozen potato giant reiterated its outlook for the entire year despite economic headwinds and a challenging market climate.
- Earnings Per Share: $0.75 vs. $0.50 expected
- Revenue: $1.13 Billion vs. $1.13 Billion expected
CEO Tom Werner stated in a statement, “We continue to manage through this difficult macro environment and are on track to deliver the higher end of our fiscal 2023 financial targets.”
Why is LW able to stay on track? Packaged food stocks (like LW) are typically immune to market declines and economic downturns, as customers continue to purchase these staples despite other cost-cutting measures. According to official data, food costs have increased by 11% year-over-year as a result of inflation.
REDUCTION IN OIL
The Organization of the Petroleum Exporting Countries (OPEC+) will reduce oil output by 2 million barrels per day in response to looming demand concerns and continued tensions between the West and Russia over the Ukraine conflict.
However, everyone is not in favor of the cut. The United States, which has been battling energy-driven inflation, criticized OPEC’s action. White House press secretary, Karine Jean-Pierre, stated that the cut aligns the group with Russia, while President Joe Biden deemed it “unnecessary.” Additionally, the White House said it could release additional oil from the Strategic Petroleum Reserve in an effort to reduce rising costs.
What will the reduction do? The output cuts are anticipated to maintain a floor for the price of oil, taking into account demand concerns over intermittent Chinese lockdowns and fears of a recession.