Defense Stocks Soar on News of Trump Victory

Defense Stocks Soar on News of Trump Victory

While markets opened down, stocks belonging to the makers of ships, fighter jets, tanks and armored vehicles were all up.

¤ Lockheed Martin: +4.8%
¤ Northrop Grumman: +5.1%
¤ Raytheon: +6.2%
¤ General Dynamics: +4.1%
¤ L-3 Communications: +5.4%
¤ Textron: +2.2%
¤ Boeing: +0.76%
¤ Huntington Ingalls: +6.5%

In early trading, the new commander in chief’s promises to rebuild the American military are helping defense stocks buck the wider market plunge.

U.S. defense stocks rose Wednesday following the election of Donald Trump, with analysts now anticipating a military arms build-up similar to the 1980s under Ronald Reagan.

While markets opened down, stocks belonging to the makers of ships, fighter jets, tanks and armored vehicles were all up.

“The Trump victory, combined with the impressive GOP retention of Congress, means our low-probability, high-impact scenario for defense spending over the next four years becomes the base case,” Roman Schweizer, an analyst with Cowen and Co. said in a note to investors Wednesday morning. “We expect defense spending will go up significantly, at least double the projected 2.5% growth rate in the now-superfluous [Budget Control Act].

The Budget Control Act — sometimes called sequestration — has capped defense spending since 2013. It is on the books until 2021 unless Congress repeals it. Under President Obama, Congress and the White House have not been able to agree on other places in the federal budget to cut to offset an increase in defines spending.

Marcus Weisgerber is the global business editor for Defense One, where he writes about the intersection of business and national security. He has been covering defense and national security issues for more than a decade, previously as Pentagon correspondent for Defense News and chief editor

_________________________________________________________________________________________________________________

Share