Key Highlights

● International Paper posted a loss-making quarter and negative free cash flow.

● The company showed progress on costs and pricing.

● Rival Smurfit Westrock slid the same day on its own report.

● Materials was among the sectors that rose that session.

International Paper (NYSE:IP) climbed on Wednesday, October 28, an unusual reaction for a company that had just reported a loss for the quarter.

The packaging maker rose on the S&P 500 as investors appeared to focus on signs that its turnaround efforts are taking hold, rather than on the headline loss.

Looking Past the Loss

International Paper posted a loss-making quarter and negative free cash flow, according to market reports. On the surface, those are not numbers that usually send a stock higher.

But the company also showed progress on cost and pricing. For a business in the middle of restructuring, investors often care more about the direction of travel than about a single quarter's bottom line. Evidence that costs are coming down and that price increases are sticking can matter more than a temporary loss.

What International Paper Does

International Paper is one of the world's largest producers of containerboard and corrugated packaging, the brown boxes used to ship everything from groceries to online orders. Demand for its products tends to track consumer spending, e-commerce activity and industrial production.

The company has been reshaping its business in recent years, closing or selling less profitable operations and working to improve margins. Pricing discipline and lower operating costs are central to that effort, which is why investors zeroed in on those parts of the report.

A Tale of Two Packaging Stocks

The reaction contrasted with that of rival Smurfit Westrock (NYSE:SW), which slid on Wednesday after reporting net sales of $8.16 billion and declaring a dividend. The divergence suggested investors were weighing each company's specific progress rather than trading the packaging industry as a single block.

Materials were among the eight of 11 S&P 500 sectors that rose, though the group's gain was modest. PPG Industries (NYSE:PPG) also climbed after raising the midpoint of its guidance.

What to Watch

The S&P 500 rose 21.38 points to 7,743.98, its third straight gain, with oil settling at $102.78 a barrel. Higher energy prices can raise costs for paper and packaging producers, which run energy-intensive mills, making cost control all the more important.

Amazon (NASDAQ:AMZN), one of the largest users of shipping boxes, reports after Thursday's close, and its comments on retail volumes could offer clues about packaging demand heading into the holiday season.