President Donald Trump’s plans to request an increase in the US military budget are giving a fresh boost to defense stocks.
Trump has proposed raising the US defense budget to around $1.5 trillion by 2027, up from the current level of approximately $901 billion.
The plan, part of what he calls a “Dream Military,” is intended to expand both production and maintenance capabilities across the armed forces.
The president also outlined conditions for defense companies, including limits on dividends, share buybacks, and high executive compensation unless firms increase production and maintenance capacity.
Following the announcement, shares of major US defense contractors rose sharply, reversing losses from the previous session that had been triggered by Trump’s criticism of executive pay and payout practices.
Lockheed Martin Corp (NYSE:LMT) stock was up 6.6%, Northrop Grumman Corp (NYSE:NOC, XETRA:NTH) shares added 4.7%, General Dynamics Corp (NYSE:GD, XETRA:GDX) was up 4%, and RTX Corp (NYSE:RTX, XETRA:5UR) gained 2.2%.