US Markets Exhibit Mixed Performance Amid Trump’s Ambitious Military Spending Plan
New York – US stock markets presented a fragmented picture Thursday, closing with the Dow Jones Industrial Average reaching 49,266 points, a 0.6% increase from the previous day’s close. The broader S&P 500 edged slightly higher, registering approximately 6,921 points, while the Nasdaq 100 experienced a marginal decline of 0.6%, settling around 25,507 points. The inconsistent performance reflects underlying investor anxieties surrounding President Trump’s recently announced surge in military spending, coupled with broader economic uncertainties.
The President’s pledge to allocate $1.5 trillion-representing roughly a 50% increase in expenditure-towards building what he described as an “unprecedented military power” has sparked debate beyond the immediate impact on defense contractors. While Lockheed Martin shares saw a significant boost, climbing over 4%, gains were less pronounced and even reversed, for companies like Northrop Grumman and Raytheon. This followed a Wednesday warning from Trump suggesting potential restrictions on dividend payouts and share buybacks for defense firms, a tactic perceived by some as a blunt tool to influence corporate behavior and potentially extract concessions.
The announcement has drawn criticism from economists and political analysts, who caution that such a dramatic shift in spending priorities could exacerbate the national debt and divert resources from crucial domestic investments like infrastructure and education. Concerns are also being raised about the potential for escalating geopolitical tensions and a renewed arms race, given the lack of detailed explanation for the increased spending and its strategic objectives.
The euro weakened against the dollar, trading at $1.1652, with the dollar fetching €0.8582. This decline reflects a continued trend of investor caution towards the euro zone’s economic outlook, potentially influenced by broader uncertainties surrounding global trade and geopolitical stability.
Gold benefited from the prevailing atmosphere of risk aversion, rising to $4,478 per fine ounce (+0.5%), equivalent to €123.55 per gram. The precious metal is often viewed as a safe-haven asset during times of economic and political uncertainty.
Crude oil prices also saw a notable rise, with Brent North Sea crude reaching $62.89 per barrel, a 4.9% increase compared to the previous day’s close, which may be attributed to both speculation surrounding global demand and potential influence from heightened geopolitical risk perceptions spurred by Trump’s announcements.