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What is the story about?
Defence stock traders on Wall Street had a nightmarish session on Wednesday as a series of social media posts by US President Donald Trump sent shares of companies such as Lockheed Martin and its peers tumbling in regular trading.
However, within a few hours, Trump's posts also sparked a recovery in these stocks during afterhours trading.
During regular trade, Trump wrote a long post on his Truth Social account, stating that he "will not permit" defence companies to pay dividends to their shareholders or carry out share buybacks, till those firms speed up their production of military equipment and address other industry issues.
“Defense Companies are not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly,” he wrote.
Trump also went on to write that until these companies do not build new production plants, no executive should be allowed a pay package in excess of $5 million.
The post led to shares of Lockheed Martin, General Dynamics, RTX Corp. and others declining between 3% to 5%.
However, a few minutes after close of trade, Trump declared that he will ask the Congress for a $1.5 trillion defence budget in fiscal 2027, which is a $500 billion (50%) jump from the $1 trillion budget for the ongoing fiscal.
In another Truth Social post, Trump said that this funding will help pay for his "Dream Military." Some Republicans have already long argued for defence spending to be hiked to 5% of GDP from the current 3.5%.
The post and hopes of new orders led to a sharp recovery in the same defence stocks that tumbled in regular trade. Lockheed Martin surged 6.5% in extended trade, followed by RTX Corp and others, that gained between 4% to 5% as well.
“As is often the case with President Trump’s comments, they are nothing more than a negotiating ploy,” said Jeffrey Rubin, president of Birinyi Associates Inc. “If his threats end up being true, it would mark a dramatic shift, but the proof will be in the pudding and we ultimately have to wait and see what comes of this.”
(With Inputs From Agencies)
However, within a few hours, Trump's posts also sparked a recovery in these stocks during afterhours trading.
During regular trade, Trump wrote a long post on his Truth Social account, stating that he "will not permit" defence companies to pay dividends to their shareholders or carry out share buybacks, till those firms speed up their production of military equipment and address other industry issues.
“Defense Companies are not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly,” he wrote.
Trump also went on to write that until these companies do not build new production plants, no executive should be allowed a pay package in excess of $5 million.
The post led to shares of Lockheed Martin, General Dynamics, RTX Corp. and others declining between 3% to 5%.
However, a few minutes after close of trade, Trump declared that he will ask the Congress for a $1.5 trillion defence budget in fiscal 2027, which is a $500 billion (50%) jump from the $1 trillion budget for the ongoing fiscal.
In another Truth Social post, Trump said that this funding will help pay for his "Dream Military." Some Republicans have already long argued for defence spending to be hiked to 5% of GDP from the current 3.5%.
The post and hopes of new orders led to a sharp recovery in the same defence stocks that tumbled in regular trade. Lockheed Martin surged 6.5% in extended trade, followed by RTX Corp and others, that gained between 4% to 5% as well.
“As is often the case with President Trump’s comments, they are nothing more than a negotiating ploy,” said Jeffrey Rubin, president of Birinyi Associates Inc. “If his threats end up being true, it would mark a dramatic shift, but the proof will be in the pudding and we ultimately have to wait and see what comes of this.”
(With Inputs From Agencies)
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