Defense Stocks Drop on Middle East Truce

Defense Stocks Drop on Middle East Truce

Defense stocks were sliding in Tuesday’s premarket after Israel confirmed it agreed to a cease-fire with Iran, shortly after President Donald Trump had declared the agreement.

Lockheed Martin shares dropped 1.5% and Northrop Grumman slipped 0.7% ahead of the opening bell. RTX, General Dynamics, and L3Harris Technologies were all falling, too.

The defense contractors’ stocks hadn’t gotten much of a boost even before the peace deal was unveiled, as short-lived conflicts don’t always change the direction of military spending. Investors probably feel that the cease-fire makes it less likely that the Trump administration will have to raise Department of Defense budgets to address tensions in the Middle East.