Nvidia's dominance in the tech industry has earned investors the news they were looking for, as Nvidia continued to maintain its dominance in the tech industry. Even though major benchmarks remained on the news, the gains were short-lived. By midday, indexes were sharply lower, with the Nasdaq Composite down more than 1%.
As important as AI is, it doesn't define the entire economy. Other more troubling trends were responsible for some concerns among investors on Thursday, and one of them involves manufacturing companies looking to keep up with strong demand in various industries. In the semiconductor sector, that is true, but the aerospace and defense industries are also experiencing difficulties in meeting the schedules its customers expect. Below, you'll learn why Boeing BA - 4.77% and Spirit AeroSystems SPR - 12.56% led markets lower on Thursday.
Boeing shares were down almost 4%, a decline of almost 4% on the Nasdaq Stock Market. The news came as the aerospace giant made an unprecedented announcement that will likely lead to more delays in delivering its popular 737 MAX line of aircraft.
Boeing has determined a quality issue in the aft pressure bulkhead of the 737 MAX. The aerospace giant said that it has done the required analysis to gain a full comprehension of the problem and is confident that it knows what it needs to do to fix it. Boeing doesn't believe there's any safety issue for aircraft currently in service.
However, it will take a significant amount of time for Boeing to remedy the situation. At least the aircraft will be delivered to the airlines and other companies that have ordered them, the airline said on condition of anonymity. It represents just the latest in a string of quality control concerns that have plagued Boeing and the 737 MAX over the past few years.
In the near future, Boeing is aiming to boost the production and delivery of 737 MAX and other aircraft. This latest problem could draw more scrutiny of those plans, particularly in respect to Boeing's relationship with its suppliers.
Is it true that Spirit and Boeing will still be friends?
The issue may be even larger for Spirit AeroSystems because it was responsible for the aft pressure bulkhead that proved troublesome. The reports suggest that the bulkheads had a large number of drill holes that were not properly aligned, and Spirit said that one of its subcontractors allegedly mistakenly placed the holes. Because other subcontractors did the job right, not all of the 737MAX bulkheads supplied by Spirit have the problem.
This isn't the first time that Spirit and Boeing have had to deal with quality control issues, he said. Earlier this year, Boeing said that Spirit had not properly installed the brackets that affix the tail of the 737 MAX to its fuselage.
Moreover, it's still unidentified how many aircraft the problem could affect. Although the 737 MAX 8 is certain to have defects, Boeing is pointing to other models to confirm their proper construction.
Spirit relies heavily on Boeing for its business, and it's not surprise that Spirit shares fell 15% in response to the news. It can take a significant amount of time for big companies in the manufacturing sector to change suppliers, so Spirit's relationship with Boeing likely isn't in imminent danger. However, there are only so many problems that a customer will put up with before it begins to look for alternatives. As airlines scramble to buy new aircraft, Boeing's leadership is in the driver's seat. However, it needs to step up to the plate and deliver on its orders. As quickly as possible, Spirit needs to get its affairs in order as quickly as possible.