economy
Defense stocks have floundered since the Iran war began. Here's why
Defense stocks haven't been the slam-dunk play some investors expected.
TL;DR
- The iShares U.S. Aerospace & Defense ETF (ITA) has fallen approximately 12% since the start of March.
- Recent earnings reports from major defense companies like RTX and Lockheed Martin missed Wall Street's forecasts.
- Investors are concerned about future U.S. government spending and the potential for 'peak defense'.
- The wars in Iran and Ukraine, while not ideal for defense stocks in the short term, may lead to long-term demand for rebuilding stockpiles.
- There are concerns that a defense reconciliation budget may not be passed before the November midterm elections.
- A partial 'blue wave' in Congress might be a more favorable outcome for defense stocks than a complete Democratic victory.