Defense stocks drop after Trump says Pentagon spending could be halved

Defense stocks dropped sharply Thursday afternoon after President Donald Trump suggested that the United States could massively cut defense spending.

Trump said that the U.S. could cut defense spending in half, according to Reuters. The comments appeared to be in the context of Trump discussing a potential conference on defense spending with China and Russia.

Defense stocks that had been higher earlier in the day quickly fell. Shares of Lockheed Martin were down 1.1%, Northrop Grumman sank 1.4% and General Dynamics lost 1.6%.

Trump has sent mixed messages on military spending throughout his 2024 campaign and in the early days of his presidency.

On one hand, Trump has enlisted Elon Musk to find places to cut costs throughout the government and pushed for a quick resolution of the war in Ukraine, which has involved the purchase of a lot of American weapons.

On the other hand, he has touted the importance of having a strong military and signed an executive order to explore building an “Iron Dome of America” missile defense system.