Trump claims military spending can be halved, U.S. defense stocks plummet across the board
U.S. President Trump stated that military spending could be cut in half, leading to a widespread decline in U.S. defense stocks. Lockheed Martin fell by 1.6%, General Dynamics, Northrop Grumman, and L3 Harris Technologies dropped by 2.1%, 3.4%, and 0.3%, respectively. The U.S. spends about $1 trillion annually on defense, accounting for approximately 3.4% of GDP. Trump's remarks triggered market volatility, and investors should exercise caution
Former U.S. President Trump "stirred up a storm," and this time the "victim" is U.S. defense stocks.
Trump stated at a press conference this Thursday that U.S. military spending could be cut in half. As a result, U.S. defense stocks fell across the board.
Aerospace and defense company Lockheed Martin fell 1.6%, having dropped about 20% since the presidential election on November 5. General Dynamics, Northrop Grumman, and L3 Harris Technologies fell by 2.1%, 3.4%, and 0.3%, respectively.
The U.S. currently spends about $1 trillion annually on defense. According to the Federal Reserve, this accounts for approximately 3.4% of the current GDP.
Recently, Trump has sent many mixed signals regarding military spending. His newly established Department of Government Efficiency (DOGE) is working to eliminate government waste, including potential funding waste at the Pentagon. Musk has publicly criticized the F-35 fighter jet program, which is one of the largest projects of the U.S. Department of Defense.
However, U.S. Secretary of Defense Lloyd Austin stated at a hearing that he does not wish to see defense spending cut below 3% of GDP.
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