Defense Stocks Rise As Tensions Escalate In The Middle East

Defense Stocks Rise As Tensions Escalate In The Middle East
Stéphane Renevier, CFA

5 months ago1 min

Mentioned in story

Defense stocks have seen some choppy waters lately, mostly because of how US political disputes might impact the country’s spending projections. But the rising conflict in Israel has had them all pointing higher this week.

Defense stocks have seen a notable uptick as the deepening conflict suggests a surge in demand for military essentials from weaponry to surveillance tools. And that rise in demand may swell beyond borders: conflicts have a way of encouraging other countries to bolster their defenses, sometimes in anticipation of ripple effects or broader regional unrest.

The iShares US Aerospace & Defense ETF (Ticker: ITA; expense ratio: 0.4%) gained almost 5% on Monday, with its mix of both defense and non-defense stocks.

Among companies more directly exposed to the defense industry, there were some even more pronounced moves higher.

Elbit, which is Israel’s largest publicly traded defense firm and provides electronic and aviation solutions to the country’s military, saw its stock rise 6% this week. US defense industry firms have been rising too: shares of Northrop Grumman, a leader in aerospace and defense technologies, rose 10%. Lockheed Martin, which sells F-35 fighter jets to Israel’s Air Force, was up about 9%. RTX (Raytheon’s newly branded parent company), which contracts with Israel on missile defense systems like the Iron Dome (a shield against short-range threats), gained 5%. And L3Harris, which delivers defense communication tools to Israel, and Huntington Ingalls, which is the top US military shipbuilder, were both up about 10%.

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