What Defense Spending Shifts Mean for Sector’s ETFs

The Senate has voted down any excess spending toward the F-22 jet fighter within the military authorization bill. The Obama administration also has more leeway to overhaul military spending. What will it mean for the sector’s exchange traded funds (ETFs)?

Reuters reports that big defense contractors could be set to lose jobs as the Pentagon cuts traditional spending on weapons. In turn, the smaller, specialty companies will have an influx of hiring as the country expands resources to protect ground troops and computer networks.

Christopher Drew for The New York Times reports that the 58-to-40 vote clearly gives the Obama administration more room to cut defense spending. The F-22, the world’s most advanced fighter, has been the center of a battle over the administration’s desire to move  more of the Pentagon’s resources away from conventional warfare projects and putting more toward battling insurgencies.

Aircraft maker Boeing Co. (BA) said that Pentagon cuts would claim 1,000 jobs in its defense business, and the company has already been hurt by the commercial slump.

• PowerShares Aerospace and Defense (PPA): up 2.4% year-to-date; Boeing 7.8%

• iShares Dow Jones US Aerospace And Defense (ITA): up 1.4% year-to-date; Boeing 7%

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