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The Pentagon is investigating how sensitive Lockheed Martin (LMT) F-35 parts went missing from UPS. (00:14) CrowdStrike (CRWD) traces AI-assisted cyberattacks targeting banks in South Korea. (01:54) Costco’s (COST) sales surge continued in September. (02:44)
This is an abridged transcript.
Sensitive components from Lockheed Martin (LMT) for the F-35 stealth fighter are missing.
U.S. officials said they are working with industry partners to recover the components and prevent another diversion.
Bloomberg News reported Wednesday that the shipment included an F-35 cockpit canopy and a weapons-bay door coated with radar-absorbing material used to reduce the aircraft’s detectability. Freight forwarder DSV warned UPS by email that the components could not pass through certain countries under International Traffic in Arms Regulations, or ITAR.
So, how did this happen?
UPS (UPS) routed the shipment through Hong Kong after an employee did not see a warning that the shipment was subject to U.S. arms-export restrictions.
The parts were supposed to travel from Australia to San Francisco through South Korea and Taiwan. After the shipment was delayed, however, it was rerouted through Hong Kong in an effort to make up time.
The report says the ITAR warning from DSV may have arrived through a different information system than the one being used by the UPS employee handling the shipment.
The Pentagon and State Department are investigating the diversion, while lawmakers are pressing for a broader review of how U.S. weapons components are transported internationally.
The Pentagon has characterized the components as unserviceable, but their radar-absorbing coatings have raised concerns about whether China could study the materials for information about F-35 stealth technology. The aircraft has long been a target of Chinese intelligence efforts.
U.S. cybersecurity firm CrowdStrike (CRWD) said a suspected China-based attacker used AI tools to target South Korean financial institutions between late September and early October.
CrowdStrike (CRWD) said the unidentified threat actor used Chinese-developed ARTEX, an open-source AI penetration-testing tool, alongside large language models. The firm assessed with moderate confidence that the attacker was a Chinese speaker and financially motivated.
CrowdStrike (CRWD) also found Claude Code session records containing personal details that may point to a 26-year-old based in Guangdong, China. However, the firm said it could not definitively associate those details with the attacker.
At least nine South Korean banks have reported or been linked to cyberattacks since late September.
Costco Wholesale Corporation (COST) reported net sales of $30.0B for the retail month of September, an increase of 13.0% from a year ago. Analysts expected a strong month with some consumers willing to make an extra trip to the retailer for its lower-than-average gas prices.
The company said comparable sales for the five-week period that ended October 4 were up 11.4%, including a 12.5% increase in the U.S., a 6.3% rise in Canada, and a 10.8% gain for other international markets. E-commerce comparable sales shot up 19.0% for the month.
After stripping out the impact of foreign exchange and gas prices, comparable sales were up 7.6% during the month, including an increase of 8.0% in the U.S.
Catalyst watch:
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Notable investor events include Mission Produce’s (AVO) Investor Day.
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Zeta Global (ZETA) will hold its Zeta Live event. Speakers include Zeta CEO David Steinberg, ZoomInfo (GTM) CEO Henry Schuck, and Taboola (TBLA) CEO Adam Singolda.
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PepsiCo (PEP) will hold its earnings conference call. Investors will be focused on whether PepsiCo can sustain its early North American volume recovery, while protecting margins amid heavier brand investment, and affordability initiatives. Some analysts think the food and beverage giant’s prior full-year outlook is at risk of a downward revision. Celsius Holdings (CELH) derives more than 40% of its revenue from PepsiCo and traded in tandem with it on earnings day 88% of the time.
Stock index futures are in the red.
Crude oil is up 3.8% at $91. Brent crude is up 3.8% at $104.
The FTSE 100 is down 0.4% and the DAX is down 0.7%. China’s (SHCOMP) markets were open again following a week-long holiday.
One stock on the biggest movers list: Applied Digital (APLD) +3.6% – Shares rose after the neocloud provider reported upbeat FQ1 with revenue up 322% Y/Y.
Economic calendar:
