Shares of several industrial and defense companies surged in afternoon trading after Reuters reported that China extended its export control relief on rare earth materials until January 10, 2027. The policy maintains supply access for overseas manufacturers and suspends additional tariffs and port fees. Rare earth elements are crucial for electric vehicle motors, wind turbines, and defense electronics, making China's export controls a significant concern for global supply chains.
The extension eased immediate fears of supply chain disruptions for automotive and clean energy producers. Among the stocks that jumped, construction machinery company Terex (NYSE:TEX) rose 6.5%, Titan International (NYSE:TWI) climbed 6.9%, Caterpillar (NYSE:CAT) increased 6.7%, AGCO (NYSE:AGCO) gained 5.3%, and defense contractor AeroVironment (NASDAQ:AVAV) soared 10.5%.
AeroVironment's stock is known for its volatility, with 64 moves greater than 5% over the last year. The recent surge was notable even for the company, indicating the news significantly impacted market perception. Four months ago, AeroVironment's stock gained 23% on strong first-quarter 2026 results, with revenue up 133% year-over-year and adjusted EPS beating estimates by 24%. Despite a mixed outlook, investors looked past the guidance shortfall due to self-inflicted factors like increased capital expenditure.
AeroVironment is down 51% since the beginning of the year, trading at $125.66 per share, 68% below its 52-week high of $392.86 from January 2026. However, long-term investors who bought $1,000 worth of shares five years ago would now have an investment worth $1,344.