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Key Takeaways
- Defense sector stocks surged Thursday morning to lead S&P gainers after President Donald Trump called for a sharp increase in military spending.
- Trump said the U.S. military’s budget should increase to $1.5 trillion in 2027, up from $850 billion in fiscal 2025 and nearly $1 trillion in 2026.
Shares of several defense contractors took flight on Thursday after President Donald Trump said that the federal budget for the military should increase significantly.
“For the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars,” Trump said in a post on his Truth Social platform.
Shares of Lockheed Martin (LMT), Huntington Ingalls (HII) and L3 Harris (LHX) were each up more than 7% recently, pacing gainers in the S&P 500 index. Shares of General Dynamics (GD) and Northrop Grumman (NOC) added more than 4%, while RTX Corp. (RTX), parent company of defense contractor Raytheon, tacked on 2%.
The Department of Defense had a budget of $850 billion in fiscal 2025, an increase of $34 billion from the prior year. In its budget proposal to Congress last year, the White House said the Defense budget should be increased by more than $113 billion in fiscal 2026, which runs through September. Trump’s $1.5 trillion proposed budget would be a roughly 50% increase.
The gains for defense stocks Thursday reverse losses they suffered on Wednesday, after Trump said the companies shouldn’t spend money on stock buybacks and dividends but instead focus resources on improving and speeding up their manufacturing processes.
The Trump administration has recently picked up military activity with last weekend’s strike that led to the capture of Venezuelan President Nicolás Maduro. Trump has hinted at other possible military actions, and the White House has renewed comments about a desire to control Greenland for strategic purposes, saying that it could utilize the military.
