Pork Stocks Rally from Baseless Flu Fears

Updated from 11:52 a.m. EDT

Fears are subsiding and pork processors regaining ground after being pummeled Monday by investors fearful the swine-flu outbreak would deter shoppers from purchasing pork.

Shares of Smithfield Foods(SFD Quote) saw the biggest loss among the processors, plunging 12% on Monday to close at $9.04. At the close the company gained 4% to $9.44.

Smithfield once again attempted to allay fears by reiterating that it has found no signs of swine flu in its swine herd or its employees at any of its joint ventures in Mexico.

Tyson Foods(TSN Quote) inched up 1% to $10.22, after falling 9% to close at $9.73 on Monday.

Despite little to no evidence that swine flu can be transmitted through pork products, investors were quick to pull out of producers after the disease was reported to have spread to the United States.

Agriculture officials have announced that they are seeking to change the name of swine flu, arguing the name suggests a problem with pork products. Agriculture Secretary Tom Vilsack said this afternoon that he's concerned that misunderstandings could have a negative impact on farmers who provide pork products to consumers around the world.

The swine-flu outbreak is just another pin in the side of the industry, as higher grain prices, soft demand and a product glut made 2008 one of the industry's weakest years.