President Donald Trump and North Korea leader Kim Jong Un met on Tuesday, and miraculously the two men came to an agreement. Kim and Trump shook hands and interacted like old friends while making promises to fulfill talks that have been going on for months. Trump rallied to bring American troops home from the Korean peninsula, while Kim once again stated his intentions to denuclearize the country. As expected, defense stocks declined in the wake of the amicable meeting.
According to USA Today, Shares of Raytheon, the makers of Patriot and Tomahawk missiles, dropped 2.8%. Lockheed Martin, which provides the Pentagon with air and missile defense systems, and the F-35 Stealth fighter jet, fell 1.3%. Northrop Grumman, which specializes in cyberwarfare and missile defense systems, dipped 1.5%. General Dynamics, a Navy shipbuilder, fell 1.6%, and Apache helicopters and aerial refueling aircraft maker Boeing fell 0.1%.
Chief Investment Officer for Commonwealth Financial Network Brad McMillan told USA Today that defense is a market reliant on war. "If weapons are used they need to be replaced," McMillan stated. "That makes war a growth story for these stocks, and one of the big potential growth stories recently has been North Korea. What the agreement does, at least for a while, is take military conflict off the table."