Defense stocks tumble as market sells off

US Marine Corps photo

A Sikorsky helicopter lands near Marines with Fox Company, 2nd Battalion, 8th Marines, Regimental Combat Team 7, and Afghan National Security Forces provide security during Operation Nightmare in Nowzad, Afghanistan, June 6, 2013.

Top defense companies’ shares declined Tuesday, erasing earlier gains, amid a broader market sell-off.

The S&P 500 Aerospace & Defense index, comprised of 13 manufacturers, fell more than 3 percent in late afternoon trading.

The declines came while President Donald Trump discussed fraught international issues with French President Emmanuel Macron at the White House, such as the Iran nuclear deal, which faces a key deadline next month.

Trump also praised North Korea dictator Kim Jong Un as “honorable” and “open” as the two leaders pursue an unprecedented summit in May or June. Trump is seeking denuclearization of the hermit regime. The two delegations also discussed the recent strike on Syrian chemical facilities.

Individually, Lockheed Martin, the Pentagon’s top weapons supplier, beat analysts’ earnings expectations earlier in the day but declined more than 5 percent to $338.31. Shares of Raytheon, meanwhile, hit an all-time high earlier Tuesday, but they eventually fell more than 4 percent to $218.22.

“I would say that it is more market-oriented and maybe a little bit of industry weakness,” Peter Arment, an aerospace and defense industry analyst for Baird, told CNBC. “We are not seeing anything in the earnings reports that warrants this kind of weakness.”

Baird has assigned “outperform” ratings for Lockheed and Raytheon. The firm’s price target for Lockheed was $410 a share as of Jan. 30, and $237 for Raytheon as of Jan. 26.

Boeing, the world’s largest plane manufacturer, tumbled nearly 4 percent putting the defense giant well on its way to becoming the worst day since April 6 when the company lost 3.06 percent.

Meanwhile, Northrop Grumman fell more than 5 percent while General Dynamics dropped 3 percent.

Arment said he expects positive earnings reports from Boeing, Raytheon and Northrop this week.

General Dynamics will also report quarterly earnings later this week.