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Defense Stocks Opt Out of Gains
As of midday trading, the broader markets are building on their gains, with sector performance showing green nearly across the board. Tech is out front, fueling a 1.2% gain in the Nasdaq Composite.
One sector that has opted out of the strength is defense after President Trump revealed that Pentagon spending could be slashed by as much as 50%. While it’s not a done deal, and the president has time to change his mind, it was enough to spook the broader defense sector. The Wall Street Journal published a recent report about the old defense guard feeling the heat from up and coming defense plays like Palantir (Nasdaq: PLTR), whose stock has been on a tear.
Lockheed Martin (NYSE: LMT) is down nearly 2% despite just securing a $114 million bid to support the U.S. Navy’s Sonar systems. With a dividend yield of 2.6%, Lockheed Martin has been a steady dividend payer and recently increased its quarterly distribution by $0.15 to $3.30 per share.
L3Harris Technologies (NYSE: LHX) is down fractionally. As a hybrid tech and defense contractor, L3Harris pays a dividend yield of 2.19%. The stock is hovering around its 52-week low despite recently launching its latest technology to operate thousands of autonomous assets at the same time. The company has been growing its revenue and boasts a record backlog of $34 billion. the company pays a quarterly cash dividend of $1.16 per share.
Northrop Grumman (NYSE: NOC) is down 2.5% on the defense spending warning despite recently securing a $1.4 billion defense contract. Northrop Grumman pays a dividend yield of 1.7%, which reflects a nice quarterly payout of $2.06 per share to offset capital declines.
Today the markets are displaying a show of resilience in the face of headwinds like inflation and tariffs, with all three of the major indices trading higher out of the gate. The S&P 500 has been buoyed by stocks like Tesla (Nasdaq: TSLA) and Apple (Nasdaq: AAPL) while Microsoft (Nasdaq: MSFT) and Amazon (Nasdaq: AMZN) got off to a slower start. President Trump is expected to hold a news conference on reciprocal tariffs this afternoon, which should be positive for the auto sector.
Tesla is extending its gains in morning trading, rising by nearly 4% after securing a massive $400 million contract from the U.S. government for its armored vehicles. Separately, following Elon Musk’s nearly $100 billion bid for OpenAI, the serial acquirer said he would drop his offer if the company remains in its current structure as a non-profit, according to reports. OpenAI backer Microsoft is trading slightly lower at last check.
Here’s a look at market performance as of mid-morning:
Dow Jones Industrial Average: Up 80 points (+0.18)
Nasdaq Composite: Up 157.29 points (+0.83%)
S&P 500: Up 30.11 points (+0.50)
Key Points
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Stocks are attempting gains out of the gate in the face of hot inflation data.
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Tesla is a catalyst after the EV maker landed a lucrative government contract.
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Earnings season rolls on.
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Market Movers
Advanced Micro Devices (Nasdaq: AMD) is getting a pop, rising almost 2% as of mid-morning. Some insider buying activity could be sparking gains as the company’s chief commercial officer scooped up $500,000 worth of shares in his first purchase in years.
Intel (Nasdaq: INTC) continues its bullish run with an impressive 8% gain on the day. The stock hasn’t put on a show like this in over 20 years.
Robinhood (Nasdaq: HOOD) stock is racing ahead by a double-digit percentage on strong earnings including a whopping 700% y-o-y increase in cryptocurrency revenue.
Analyst firm Baird is reportedly bullish on energy services play GE Vernova (NYSE: GEV), saying the company is well positioned to meet growing energy demand. Baird analysts started coverage of the stock with an “outperform” rating and $448 price target attached. The stock is up 1.5% today.
Casino operator MGM Resorts (NYSE: MGM) is soaring about 14% on the day, buoyed by a strong earnings print, further buoyed by China and a rosy forecast.
Hertz (Nasdaq: HTZ) shares are sinking in response to weaker-than-expected quarterly results, including a wider loss than anticipated. The stock is down over 4%, owing to its failed push into electric vehicles for which it featured Teslas.
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