Al Root
Russian President Vladimir Putin threw defense stocks another curveball on Tuesday, the latest in a series of surprises since the Nov.5 presidential election.
Putin essentially made nuclear war appear more likely with an update to the country's nuclear doctrine that allows him to respond to conventional attacks with nuclear weapons. The change in stance came after Ukraine recently fired U.S.-made long-range missiles into Russia.
Shares of four large U.S. defense contractors -- Lockheed Martin, Northrop Grumman, General Dynamics, and L3Harris Technologies -- were up an average of 0.6% in early Tuesday trading, while the S&P 500 and Dow Jones Industrial Average were off 0.5% and 0.9%, respectively. The iShares Aerospace & Defense ETF was up 0.4%.
The early gains leave the four defense stocks down about 3%, on average, since the Nov. 5 election, while the S&P 500 has gained north of 1%. Investors are weighing what President-elect Donald Trump's pending defense appointments and focus on government efficiency mean for defense spending.
Tesla and SpaceX CEO Elon Musk is leading the newly created Department of Government Efficiency. SpaceX has made no secret of its dislike of cost-plus government contracts, which could affect defense contracting down the road.
Putin's decision makes evaluating the sector all the more difficult. Through early trading Tuesday, the four defense contractor stocks were up an average of about 13% year to date. The iShares ETF was up about 19%.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
November 19, 2024 10:45 ET (15:45 GMT)
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