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Investing.com -- Shares of major defense contractors fell in afternoon trading Wednesday following news of planned defense budget cuts. Lockheed Martin Corporation (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC), General Dynamics Corporation (NYSE:GD), and RTX (NYSE:RTX) all expired sharp drops following the headlines, although some still remain positive on the session.
These stock movements come on the heels of a report by The Washington Post stating that the Trump administration has directed the Pentagon to prepare for significant budget reductions. Defense Secretary Pete Hegseth has reportedly instructed leaders at the Pentagon and the military to develop plans for slashing 8% from the defense budget annually over the next five years. The memo detailing these directives was obtained by The Post.
The news of budget cuts has raised concerns among investors about future revenue streams for defense companies, which typically rely on government contracts for a substantial portion of their business.
The stock responses suggest that investors are weighing the potential impact of the planned cuts against other factors that may influence these companies’ financial outlooks. It’s important to note that while budget cuts can pose challenges, defense contractors often have diverse portfolios and long-term contracts that may mitigate some immediate effects.
As the market processes this information, the full implications of the planned budget cuts on the defense sector and individual companies within it will become clearer over time. Investors will be closely monitoring developments and any further details that emerge regarding the Pentagon’s budget planning.
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