economy
Defense stocks continue to come under pressure
The iShares U.S. Aerospace & Defense ETF has dropped about 10% since the start of March.
TL;DR
- Defense stocks have struggled since the beginning of March, dropping approximately 10% while the S&P 500 gained 8.6%.
- Citi analysts attribute the pressure to a combination of weak earnings and the increasing narrative around AI-related disruptions in the sector.
- Defense companies mentioning "AI" and "software" on conference calls have shown a negative correlation with AI-themed stocks.
- Analysts are hesitant to buy the dip, viewing the situation as a second-half weighted rebound event, but note that persistent overhang could create buying opportunities.