In early trading on Thursday, equities linked to the U.S. defense industry saw pronounced upward momentum after the president explicitly called for a significant increase in federal defense expenditures. Leading this advance, shares of Northrop Grumman Corporation (NYSE:NOC) soared by 7.82%, while Lockheed Martin Corporation (NYSE:LMT) climbed 6.52%. Similarly, L3Harris Technologies (NYSE:LHX) and RTX Corporation (NYSE:RTX) increased by 6.29% and 4.45%, respectively.
This market response followed a statement made on Wednesday underscoring the imperative to substantially expand the United States military budget. The president expressed a vision for the fiscal year 2027 military budget to reach $1.5 trillion, superseding the previously proposed $1 trillion. This amplified funding level was described as critical for constructing a "dream military," highlighting the administration’s intent to elevate the nation's defense capabilities materially.
However, the president's remarks also contained pointed criticisms aimed at defense contractors. Despite the call for increased overall spending, there was reproach targeting defense companies for their allocation of resources. A statement on the social media platform Truth Social accused these corporations of prioritizing dividends and share buybacks over capital investments in production facilities and equipment. This, the president asserted, had contributed to delayed deliveries of necessary military hardware.
Further, the president specifically identified concerns with Raytheon Technologies, the primary defense segment within RTX Corporation. He indicated dissatisfaction with Raytheon’s responsiveness and investment strategy, warning that inadequate reinvestment in plants and equipment could imperil current Department of Defense contracts. The administration reportedly regards Raytheon as the least responsive contractor among its peers, raising the possibility of contract reviews or cancellations if improvements are not made.
It is notable that despite these criticisms, Raytheon has expanded its global footprint with several significant contracts in recent years. For instance, in December 2025, the company secured a $1.7 billion contract to supply Spain with four Patriot air and missile defense systems, representing a major international defense sale. Prior to that, in September 2025, Raytheon concluded a $26 million agreement to supply rocket motors, bolstering its product offerings within defense technology.
From a market performance perspective, RTX Corporation has demonstrated substantial gains over the past year, with stock appreciating by over 60%, according to Benzinga Pro data. Despite posting a modest decline of 2.45% on the previous trading day, the stock closed at $660.62. Analytical ratings further reflect its position, ranking in the 91st percentile for quality and the 88th percentile for momentum per Benzinga’s Edge Rankings.
Other companies in the defense sector also exhibited considerable stock strength following the budget announcement. Lockheed Martin’s shares rose above $529, marking a 6.52% increase, while Northrop Grumman’s stock price advanced more than 7%, reaching above $619. L3Harris Technologies traded near $329, with gains exceeding 6%. These movements suggest broad investor enthusiasm anticipating greater government spending and potential contract growth across the defense industry.
Despite these optimistic price actions, the overarching dynamic includes palpable tension between increased budget allocations and critiques of how defense firms deploy their capital. The juxtaposition of calls for heightened military investment alongside warnings against prioritizing shareholder returns over capacity expansion paints a complex portrait of expectations and accountability within the defense sector.
Market participants will likely scrutinize upcoming corporate investment decisions and Department of Defense contracting activities to gauge how these competing factors evolve. The scenario underscores the importance of balance between financial discipline and reinvestment in operational capabilities, which are crucial for meeting government requirements and satisfying investor expectations in a high-demand environment.