Increased Defense Spending Could Lift DFEN

When the federal government is willing to open its expansive wallet to spend on defense, it could be beneficial to the Direxion Daily Aerospace & Defense Bull 3X Shares ETF (DFEN). 2024 is slated to bring additional spending to this sector amid current geopolitical strife.

Russia’s invasion of Ukraine in 2022 and the conflict in the Middle East have heightened the need for defense spending. As 2024 draws closer, the U.S. government isn’t decreasing its defense budget. And that’s even during times of high inflation, which should pave the way for investment opportunities.

“The fiscal 2024 National Defense Authorization Act calls for $886.3 billion in U.S. defense spending, up 3.3% from 2023 levels,” U.S. News reported, noting that “the dynamics in the defense industry changed dramatically when Israel declared war on Hamas in October.”

“The war in the Middle East may force the U.S. government to increase defense spending in the coming years, and defense stocks have jumped since the conflict began,” the report added. “Defense stocks are attractive investments because they often have predictable, long-term government contracts.”

Get Leveraged Exposure With DFEN

DFEN seeks daily investment results equal to 300% of the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index. The index attempts to measure the performance of this industry of the U.S. equity market.

Like the rest of Direxion’s roster of leveraged ETFs, DFEN gives traders the ability to:

  • Magnify short-term perspective with daily 3X leverage.
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade.
  • Stay agile with liquidity to trade through rapidly changing markets.

These increased defense budgets will also allow for investment in technological advancements. Artificial intelligence (AI), for example, is already being used in naval warfare.

“The U.S. Navy is pushing new technology to its undersea fleet to make it safer, smarter and deadlier, while also nearing a major step in developing its next-generation attack submarine,” a Defense News article said.

Given this, another trading opportunity to consider is the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT). The fund seeks daily investment results equal to 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index, which aims to provide exposure to companies in developed markets expected to benefit from the adoption and use of robotics and/or AI.

For more news, information, and analysis, visit the Leveraged & Inverse Channel.