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Industrial stocks slid on Monday after China announced sanctions against US defense firms for their proposed weapons sales to Taiwan.
The country will sanction Boeing, Raytheon, and Lockheed Martin for their participation in the $1.8 billion arms deal, Chinese Foreign Ministry spokesman Zhao Lijian said in a statement.
The S&P 500’s industrials sector sank 3% as of 12:50 p.m. ET, with only energy stocks dragging more on the benchmark index.
The Dow Jones industrial average, which touts a heavier skew toward industrial names than peer indexes, fell more than 800 points and is on pace for its worst day since early September.
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Industrial stocks dragged major indexes lower on Monday after China announced it will sanction US defense firms over planned weapons sales to Taiwan.
The country will impose sanctions on Boeing, Raytheon, and Lockheed Martin, as well as individuals involved in the proposed $1.8 billion deal, Chinese Foreign Ministry spokesman Zhao Lijian said in a statement. The move comes in retaliation to the US State Department’s approval of the arms sales.
The announcement drove a sharp sell-off of the involved companies’ stocks that broadly pulled industrials into a hefty intraday loss. The corresponding S&P 500 sector sat 2.9% lower as of 12:50 p.m. ET, trailing only energy stocks in what’s poised to be the worst day for stocks in a month. Within the industrials sector, aerospace and defense stocks fell more than 3%.
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Boeing fell as much as 4.4%. Raytheon and Lockheed Martin fell 4.3% and 3.2% at their respective intraday lows.
The news disproportionately slammed the Dow Jones industrial average, which boasts a heavier skew toward industrials than peer indexes. The benchmark sank more than 800 points at intraday lows, on pace for its worst day since early September.
China didn’t specify the sanctions’ timing or severity, only noting that the actions are “necessary measures to safeguard national sovereignty and security interests.” The Trump administration has previously moved to pressure China through arms deals with Taiwan.
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China similarly sanctioned Lockheed Martin after the US approved a $620 million deal with Taiwan involving upgraded surface-to-air missiles in July.
The sector’s slide exacerbates an early market tumble. Chances of a stimulus deal being passed before Election Day are all but entirely faded as Democrats and the White House failed to reach a weekend agreement. The stalemate comes as daily new coronavirus cases surged past 80,000 on both Friday and Saturday, sparking fears of renewed lockdowns and harsh economic fallout.
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