USA Rare Earth Inc. (USAR) saw its stock soar 5.55% in Thursday trading, riding the wave of a broader rally in rare earth stocks. The surge comes as the rare earth sector experienced significant gains, with industry leader MP Materials skyrocketing 52%, NioCorp Developments rising 19%, and Energy Fuels climbing 17%.

The catalyst for this sector-wide rally was a groundbreaking announcement from MP Materials, which revealed a public-private partnership with the U.S. Department of Defense (DoD). This collaboration aims to accelerate the development of an end-to-end U.S. rare earth magnet supply chain, reducing the country's dependence on foreign sources. As part of the deal, the Pentagon is set to become MP Materials' largest shareholder through a $400 million investment in convertible preferred shares and warrants.

This partnership highlights the strategic importance of rare earth elements in both defense and commercial applications, boosting investor confidence across the sector. MP Materials plans to construct a second domestic magnet manufacturing facility, dubbed the "10X Facility," which is expected to begin commissioning in 2028. This development, along with the broader push for supply chain independence, is likely driving the positive sentiment for USA Rare Earth and its peers, as the market anticipates increased demand and government support for domestic rare earth producers.