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 defense spending
As of 10:30 a.m. EST, here’s where stocks stand among the largest suppliers:
- Lockheed Martin: Up 4.8 percent
- Northrop Grumman: Up 5.1 percent
- Raytheon: Up 6.2 percent
- General Dynamics: Up 4.1 percent
- L-3 Communications: Up 5.4 percent
- Textron: Up 2.2 percent
- Boeing: Up .76 percent
- Huntington Ingalls: Up 6.5 percent
(This story will be updated throughout the day.)