Stock market today: Dow, S&P 500, Nasdaq futures stall as oil jumps, fresh earnings roll in after Tesla's flop
Yahoo Finance’s Jake Conley reports:
Earlier this month, China announced tightened export restrictions on rare earth minerals, including a complete prohibition on all exports for defense applications. That potentially leaves the US defense industry without a key input across a range of weapons systems.
But during earnings calls this week, leadership at the country’s top defense contractors — Lockheed Martin (LMT), RTX Corporation (RTX), and Northrop Grumman (NOC) — downplayed concerns over the supply challenges, even as tensions between Washington and Beijing over the inputs remain high.
Rare earths are crucial components in the weapons systems used by the US, from F-35 fighter jets to Tomahawk missiles. Only recently has real effort gone into developing a dependable domestic supply chain for the materials.
China controls approximately 70% of rare earth mining capacity, 90% of separation and processing capacity, and 93% of magnet manufacturing globally. That gives Beijing immense control over global supply.
“We are days if not weeks away from a crisis when it comes to national security,” said Neha Mukherjee, a rare earths research manager at the consultancy and research firm Benchmark Mineral Intelligence.
So why weren’t rare earths a bigger focus on defense contractors’ earnings calls? The issue may be less intense than the dominant narrative in the market suggests, said Morningstar equity analyst Nicolas Owens, who covers the defense and aerospace sectors.