What Happened?
Shares of packaging and materials company International Paper (NYSE: IP) fell 9.8% in the afternoon session after the company reported second-quarter earnings that widely missed analyst expectations. The packaging giant posted an adjusted profit of $0.20 per share, falling well short of the 41 cents analysts forecasted. This marked a significant decline from the $0.55 per share reported in the same period last year. Company officials pointed to higher input costs, a heavy schedule of planned outages, and soft demand in Europe as the primary reasons for the reduced profitability. The weak bottom-line result overshadowed revenue figures that actually beat expectations, indicating investors focused on the hit to margins. The negative sentiment echoed across the packaging sector, as peers also reported weaker financial results.
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What Is The Market Telling Us
International Paper’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 7.5% on the news that the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains. However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels. Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism. The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
International Paper is down 9.7% since the beginning of the year, and at $48.01 per share, it is trading 20.1% below its 52-week high of $60.09 from January 2025. Investors who bought $1,000 worth of International Paper’s shares 5 years ago would now be looking at an investment worth $1,380.
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