MW Potatoes, discount chains and drugmakers offer havens in stock-market bloodbath

By Steve Gelsi

Lamb Weston, TJX and AbbVie buck historic market selloff as the Dow Jones Industrial Average falls 1,300 points

Potato maker Lamb Weston Holdings Inc., telecom giant Verizon Communications Inc., drug maker AbbVie Inc. and retailer TJX Cos. all bucked a sharp market selloff Thursday, as Wall Street turned to stocks offering exposure to tariff-resistant businesses such as food, prescription drugs and subscription revenue.

Discount retailers also emerged as a way to play the big tariff selloff of 2025, as the Dow Jones Industrial Average DJIA cratered by about 1,300 points at midday.

Despite the swoon in the stock market, stocks that reflect the everyday needs of Americans, such as food and medicine, had their turn to shine.

Art Hogan, chief market strategist at B. Riley, highlighted Johnson & Johnson $(JNJ)$ and Pfizer Inc. $(PFE)$ as drawing some positive interest as investors look for places to hide among consumer staples and medicine stocks.

"If you're in a risk-off mood, those are two of the most defensive sectors," Hogan said. "It's similar to the derisking we've seen for the last six weeks. If we go into an economic slowdown, you want to get into the stuff that you need, not the stuff you want."

Edward Jones analyst Brittany Quatrochi said consumer staples are outperforming other sectors partly because "it's the last area where consumers cut back. They're more attractive in uncertain times."

Much of the U.S.'s food production is domestic, which makes it exempt from tariffs, she added.

Shares of Procter& Gamble Co. $(PG)$, PepsiCo Inc. $(PEP)$, General Mills Inc. $(GIS)$, Church & Dwight Co. $(CHD)$, Kraft Heinz Co. $(KHC)$, Conagra Brands Inc. $(CAG)$ and Kroger Co. $(KR)$ all rose Thursday.

Lamb Weston $(LW)$ rallied by nearly 12% after the company told analysts it sees relatively little impact from tariffs at the current time.

"We're evaluating other expenditures to assess the impact of yesterday's announcements, but do not currently expect them to have a significant impact on our fiscal 2025 financial results," the company said.

Lamb Weston also said it expects to meet its 2025 revenue target of $6.35 billion to $6.45 billion, compared to the FactSet consensus estimate of $6.35 billion.

Merck & Co. Inc. shares $(MRK)$ rose 1.2% and AbbVie $(ABBV)$ rose factionally after President Trump listed pharmaceuticals, along with copper (HG00), semiconductors and lumber, as goods that won't be subject to tariffs.

Health insurers were also higher, with Molina Healthcare Inc. $(MOH.AU)$ up 8.4% and Centene Corp. $(CNC)$ up 5.2%. UnitedHealth Group Inc. $(UNH)$ was up 4.1% and Elevance Health Inc. (ELV) was up 3.9%.

Also read: Trump's new tariff plan gives exemptions to Canada, Mexico, pharma, other sectors - for now

TJX $(TJX)$ added 0.5% and BJ's Wholesale Club Holdings Inc. $(BJ)$ advanced by 1.6% after Citi analysts upgraded the two discount-retailer stocks to buy from neutral.

Citi cut its ratings on Best Buy Co. Inc. $(BBY)$ and RH (formerly Restoration Hardware) $(RH)$ to neutral. RH's stock fell 42% and Best Buy dropped 15.3%.

Meanwhile, Jefferies analysts said off-price retailers are only "moderately exposed" to tariffs.

"The resounding sentiment from the off-price C-suites is that the sector is well positioned to take advantage of any dislocation in the market due to the nature of the business model," Jefferies analysts said. "We expect off-price's value proposition could resonate well with customers ahead, given the uncertainty."

A handful of other stocks with consumer exposure also rose, including Verizon $(VZ)$ and AT&T Inc. $(T)$

Edward Jones analyst Dave Heger said those telecom companies will benefit from subscription revenue.

"They mostly have domestic exposure so they're more resistant to tariffs," Heger said. "Even when macroeconomic fears are the rise, people aren't going to get rid of their cell phones."

-Steve Gelsi

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(END) Dow Jones Newswires

April 03, 2025 14:15 ET (18:15 GMT)

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