Shares of US military companies jumped in the wake of the escalation of the Israel-Hamas crisis.
During the October 9 trade session, stocks of Lockheed Martin Corp, Northtrop Gruman Corp and other arms makers led gains in the S&P 500. Lockheed Martin – the famous producer of F-16 and F-35 fighter jets, as well as Javelins and even intercontinental ballistic missiles, gained almost 9%, while RTX (former Raytheon) – the manufacturer of the Patriot air defense system – rose up to 4%.
Lockheed Martin Share Rise Amid Escalation in Gaza Strip
© Photo
The trend continued on October 10 during the pre-market session. According to analysts, the unrest in the Middle East brought investor attention to defense stocks. De facto, this means that traders believe the US will actively support Israel with arms and munition, thus boosting profits of American defense companies.
RTX Shares Rise Amid Escalation in Gaza Strip
© Photo
This also implies that US investors allegedly bet on the long-lasting conflict.
Earlier, US President Joe Biden pledged his "full support" to Israel amidst ongoing hostilities. According to media reports, Tel Aviv asked the White House to replenish their supply of missile interceptors, referring to the Iron Dome system.
White House National Security Council spokesman John Kirby later said that the Biden administration is mulling asking Congress for additional funds to support Israel.
The United States is the global top military spender, dedicating about 3% of GDP or 12% of all government expenditures to defense – which is almost $880 billion. For comparison, Russia and China together spent less than $300 billion on defense in 2023.