American defense contractors were practically drooling over the prospect of all-out war with North Korea as President Donald Trump was recklessly flinging “fire and fury” last year, but Tuesday’s summit between Trump and North Korean leader Kim Jong-un appears to have dampened war profiteers’ dreams of yet another catastrophic U.S.-led military conflict—at least for now.
“If weapons are used they need to be replaced. That makes war a growth story for these stocks. What the agreement does, at least for a while, is take military conflict off the table.”
—Brad McMillan, financial analyst
Demonstrating that even the slightest whiff of peace is enough to scare investors in America’s most profitable military contractors, USA Today reported on Tuesday that shares of Raytheon, Lockheed Martin, Northrop Grumman, Boeing, and General Dynamics all “took a dive” as Trump and Kim signed a vague, non-binding agreement that is merely the first step toward a lasting diplomatic solution.
“Peace is bad for business,” noted writer Ajit Singh in response to the new report.
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According to USA Today:
Shares of Raytheon, which makes Patriot and Tomahawk missiles, fell 2.6 percent. Lockheed Martin, which supplies the Pentagon with air and missile defense systems as well as the F-35 Stealth fighter jet, tumbled one percent. And Northrop Grumman, which has increased its focus on cyber warfare and missile defense systems more recently, declined 1.3 percent. Boeing, which makes Apache helicopters and aerial refueling aircraft, dipped 0.2 percent. General Dynamics, a Navy shipbuilder, fell one percent.
By contrast, the Dow Jones industrial average edged up 20 points.