Sector Snap: Paper and Forest Products

In morning trading, the Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq composite index were all down about 1 percent. Investors were anticipating minutes from the Federal Reserve's Aug. 7 meeting, which may provide insight into whether an interest rate cut is imminent.

Despite the downward trend, Fitch Ratings said it expects modest earnings improvement in the third quarter for many companies in the North American paper and forest products industries -- with the exception of newsprint.

Fitch said the packaging and containerboard segment should also post improvement because of an active export market and cheaper U.S. dollar.

"Prices for commodity lumber and oriented strand board appear to have a found a bottom comfort zone even as the housing market continues to find new lows and further disrupt the broader financial markets," Fitch said in a report. "The financial outlook for this segment for the balance of 2007 looks no worse than the second quarter."

In morning trading, International Paper Co. lost 10 cents to $34.25, Universal Forest Products Inc. declined 78 cents, or 2 percent, to $27.65, and Weyerhaeuser Co. shed 85 cents to $66.09.

Pope Resources LP lost 20 cents to $40.30, Temple-Inland Inc. declined $1.31, or 2.3 percent, to $54.57, and Bowater Inc. lost $1.01, or 5.6 percent, to $17.17.

MeadWestvaco Corp. declined 56 cents to $31.09 and Plum Creek Timber Co shed 50 cents to $41.10.