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Markets Are Soaring, but Boeing Is Not: Big Halt to 737 Max Production Could Hurt US Economy

12-16-2019
 In this file photo Boeing 737 MAX 8 planes are parked near Boeing Co.'s 737 assembly facility in Renton, Wash. Investigators were rushing to the scene of a devastating plane crash in Ethiopia on Sunday, March 10, 2019. (AP Photo/Ted S. Warren File)
In this file photo Boeing 737 MAX 8 planes are parked near Boeing Co.'s 737 assembly facility in Renton, Wash. Investigators were rushing to the scene of a devastating plane crash in Ethiopia on Sunday, March 10, 2019. (AP Photo/Ted S. Warren File)

Markets appear to be responding to the positive trade news coming out of Washington.

The S&P 500, Dow, and Nasdaq all closed at record highs Monday. This came on the news of the US reaching a Phase One trade agreement with China this week along with last week's announcement that the House of Representatives finally approved President Trump's USMCA trade agreement between the US, Mexico, and Canada.
 
Stock watchers also point to individual stocks reaching new altitudes as an indication that the market will continue to go up.

One potential drag on the economy could be Boeing's decision Monday to halt production of its 737 Max airplane. The halt will take place at Boeing's plant that employs 12,000 people in Renton, Washington, near Seattle.

The company says no layoffs are planned, but the impact will still be felt in the broader airline and aerospace industries that ordered the aircraft. Suppliers of Boeing could need to scale back as a result.

The Boeing halt could hurt US GDP as well since it's such a large company. "This is the country's biggest single manufactured export product," explains Richard Aboulafia, an aircraft industry analyst at the Teal Group.

The Max, which is Boeing's most important jet, has been grounded since March after crashes in Indonesia and Ethiopia that killed 346 people. Investigators have said problems with the 737 Max's flight control software contributed to the crashes.

The company is trying to earn permission from the US Federal Aviation Administration and other global regulators to fly the planes again, but that appears to be taking much longer than Boeing initially thought it would take.

 

 

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