U.S. defense stocks fall on Democratic control expectations
American defense company stocks have significantly declined due to expectations of a Democratic victory in the upcoming midterm congressional elections. This has cast doubt on the potential cancellation of former President Trump's proposal to increase military spending by $500 billion. The "iShares US Aerospace & Defense ETF" index has fallen by 16% from early July to mid-October. Major company shares have also dropped sharply: Lockheed Martin by over 20%, Northrop Grumman by 35%, and L3Harris by 36%. This is likely to lead to revisions of major military projects such as the F-35 fighter jets and Sentinel missile systems. Some investment institutions are expected to recover their stocks as third-quarter earnings results emerge, amid ongoing demand for military systems driven by global geopolitical tensions in Ukraine and the Middle East.
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