US defence stocks fall as Democrats' election chances rise
Summarised from 2 outlets · Updated 19 Oct, 22:19 · Archive
US defence stocks have fallen sharply as investors worry a Democratic election victory could block military spending increases.
US defence stocks have fallen significantly in recent weeks as investors worry that a Democratic victory in the midterm elections could block President Trump's plans for military spending increases. The iShares US Aerospace and Defense ETF fell 16% between early July and mid-October, substantially underperforming the S&P 500, which rose 3.5% over the same period. Share prices for major contractors including Northrop Grumman, GE Aerospace and General Dynamics all declined.
Trump has proposed boosting military spending by $500 billion, raising annual defence spending from $1 trillion to $1.5 trillion. However, this budget requires congressional approval. Democrats have shown strength among early and mail-in voters, according to state election data, and new polls show they have reached key thresholds in closely-watched Senate races. Military spending has become a partisan issue, with analysts noting that Democrats could target Trump's most ambitious proposed projects.
Defence analyst Robert Stallard at Vertical Research Partners told the Financial Times that 'anything that has Trump's name on it or the word golden could be at risk'. Investors are concerned that worsening inflation, rising Treasury yields and congressional desire to reverse other Trump budget cuts will prevent approval of the military spending increase.
How it is being reported
- Defense stocks plummet as investors worry possible Dem midterms win could thwart Trump’s spending plansDefense stocks have plummeted over the past few weeks as investors grow convinced Dems will emerge victorious in the midterm elections – potentially thwarting President Trump’s plans for huge military spending.New York Post · 19 Oct, 22:02
- US defence stocks tumble as investors bet on Democratic election sweepDonald Trump’s proposed $500bn military spending boost at risk as bipartisan support for higher budget fraysFinancial Times · 19 Oct, 14:04
In this story: Donald Trump · Democrats · Northrop Grumman · GE Aerospace · General Dynamics · Lockheed Martin · United States
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