Boeing accounted for 117 points in the stock market’s drop.
As the trade war continues to intensify, the stock market is feeling the effect. Last week was rough and it got even worse on Monday. The Dow Jones fell more than 600 points, making it the worst performing day since early January.
Many companies, including Apple, Boeing, and Caterpillar, saw its shares fall considerably. Boeing’s shares fell more than 5%, which accounted for 117 points in the stock market’s drop. This makes Boeing the single biggest contributor to the Dow’s decline.
Problems lie ahead for Boeing
This drop happened after the editor-in-chief of the Chinese newspaper Global Times suggested that Boeing could be singled out in a trade war. The Global Times has close connections with the Chinese government.
Boeing and China have a somewhat interdependent relationship. Boeing’s business reportedly adds more than $1 billion to the Chinese economy each year. And one-third of the orders for the Boeing 737 aircraft comes from China.
However, Boeing seemed unconcerned by these threats. A Boeing spokesperson told CNBC that the company expects the U.S. and China to come to a mutually beneficial agreement.
However, Boeing’s problems didn’t start with the trade war and they certainly won’t end with it. The company has been under close scrutiny since the deadly 737 airplane crash in March.
The cause of the crash has yet to be determined but the 737 Max has been grounded ever since. This is a problem for Boeing, since the 737 accounts for the majority of the company’s aircraft orders.
Bank of America analyst Rob Epstein says it isn’t like that China will cancel orders from Boeing. China depends heavily on American and European technology for its own aerospace industry while the reverse isn’t true.
But even if this becomes a non-issue, many challenges still lie ahead for Boeing. The 737 Max aircraft will likely remain grounded through the summer travel months. And Boeing will have to deal with a number of pending lawsuits related to the crash.
A Bloomberg analyst says that settling with families of the crash victims could cost the company $1 billion. If Boeing is found to be at fault for the crash, this figure could be even higher.