Defense Spending on the Rise
Last month, the Senate approved a wide-ranging, $854 billion bill that includes a $675 billion allocation towards the Defense Department, accounting for almost 80% of the total bill. In short, the United States doesn’t skimp on defense spending.
Additionally, such a large allocation towards defense didn’t receive much contention as Senators approved the bill 93-7.
“Critically, after subjecting America’s all-volunteer armed forces to years of belt-tightening, this legislation will build on our recent progress in rebuilding the readiness of our military and investing more in the men and women who wear the uniform,” said Senate Majority Leader Mitch McConnell, R-Ky.
McConnell’s comments buttress the willingness of the U.S. government to open their wallets for defense spending–an estimated $610 billion goes towards defense, besting the money spent by the next seven countries combined.
In turn, defense stocks have been reaching all-time highs with aforementioned names like Boeing, Raytheon, Lockheed Martin and L3 Technologies leading the way. As such, the gains in equities have been spilling over into ETFs and here are four to keep an eye on as earnings results are revealed, starting with Lockheed Martin on Tuesday.
A number of market analysts feel that this run in the aerospace and defense sector could continue even after the extended bull market continues to lose steam and delve into a full-blown correction. According to MarketWatch investing columnist Philip Van Doorn, “stock prices tend to be driven by increases in earnings. The federal income tax cuts that went into effect this year will no doubt boost profits and potentially share prices. But that party will surely end, after which it is reasonable to expect the aerospace and defense subsector to continue to outperform the broader market.”
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