Al Root

While manufacturing stocks are generally no place to hide as President Donald Trump's tariff bombshell sends shock waves through the market, defense companies, which make and sell primarily in the U.S., look like a haven for now.

Through midday trading, the S&P 500 and Dow Jones Industrial Average were down 3.4% and 2.8%, respectively, as tech stocks took it on the chin. The Roundhill Magnificent Seven ETF fell 5.4%.

Boeing, Caterpillar, Deere, and GE Vernova shares fell 7.4%, 6.7%, 3.2%, and 7.8%, respectively.

"The aerospace industry is an export industry, and so a global trade war is a most definitely a bad thing," wrote Vertical Research Partners analyst Rob Stallard on Thursday.

Boeing CEO Kelly Ortberg told Congress on Wednesday that free trade is important to the company. Boeing builds its planes domestically, but some 20% of the parts in a jet come from outside the U.S. It is also a huge exporter, putting it in the crosshairs of nations looking to retaliate against the U.S.

Potential retaliation seems to be driving a lot of the initial reaction. Deere and AGCO export to Europe, Jefferies analyst Stephen Volkmann said in a Thursday report.

AGCO stock was down 9.4% in midday trading. GE Vernova is another U.S. machinery exporter.

Defense stocks were performing great, relatively speaking. Lockheed Martin shares were up 0.8%. Northrop Grumman added 1.5%, while General Dynamic and L3Harris Technologies shares fell 0.6% and 1.5%, respectively.

Those four build in America and sell primarily to the U.S. government.

Thursday's moves are only first-day reactions. More volatility is to be expected. The overall impact on industrial stocks is "clear as mud," Volkmann said in his report.

That isn't good news. Investors hate uncertainty.

Write to Al Root at allen.root@dowjones.com

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April 03, 2025 13:52 ET (17:52 GMT)

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