Shares of prominent defense contractors, including Lockheed Martin (NYSE:), Northrop Grumman (NYSE:), and Raytheon Technologies (NYSE:), experienced a decline on Monday. This drop came amid emerging reports of a potential ceasefire agreement between Israel and Lebanon’s Hezbollah, which could signal a de-escalation in regional tensions.
The S&P 500 Industry Index fell by as much as 0.5%, contrasting with the broader , which saw an increase of 0.1%. Among the notable decliners in the aerospace and defense sector were Lockheed Martin with a 2.4% decrease, Northrop Grumman down by 1.6%, Axon with a 1.1% decline, and L3Harris also dropping by 1.1%.
The potential ceasefire agreement comes as a result of a new round of shuttle diplomacy by a senior envoy of the outgoing Biden administration. Reports suggest that Israel might be just days away from finalizing a ceasefire deal with Hezbollah, although details of the agreement are yet to be made public.
In related news, oil prices experienced a significant drop of more than $2 on the same day. The decline in oil prices appears to be a reaction to the multiple reports regarding the agreed terms of a deal to conclude the Israel-Hezbollah conflict. These reports were attributed to unnamed senior U.S. officials, contributing to the market movements observed on Monday.
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