Defense Stocks Plunge 19% Ahead of US Midterms
Major military contractors and aerospace companies saw a sharp selloff as investors feared Democratic midterm wins would lead to increased scrutiny of defense spending.
Shares of major military contractors and aerospace companies experienced a sharp selloff through October 14, with the S&P 1500 Aerospace and Defense Index dropping nearly 19% from an early-August high. The decline hit companies including Lockheed Martin Corp., Northrop Grumman Corp., and GE Aerospace.
GE Aerospace saw its stock fall 19% as rising fuel prices impacted air travel. Investors are divesting from these assets due to concerns that Democrats may win the November midterm elections, which could lead to increased scrutiny of defense spending and the relationships between Pentagon contractors and the Trump administration.
Some investors are buying the dip, betting that stocks will recover once the elections conclude and fuel prices stabilize.
