Lockheed Martin, RTX, and Northrop Grumman gain amid rising geopolitical risk and renewed focus on military spending
Defense stocks surged early Friday as investors reacted to news that Israel launched a series of airstrikes on Iran, escalating tensions in the Middle East and fueling fears of a broader regional conflict.
Lockheed Martin (LMT) shares jumped as much as 3% in early trading, while Northrop Grumman (NOC) and RTX (RTX) posted gains of around 2%. All three defense contractors supply advanced weaponry to Israel through contracts with the U.S. government.
The move in defense stocks came as broader markets opened sharply lower. The S&P 500 and Nasdaq dropped about 0.7%, while the Dow Jones Industrial Average declined more than 1.1%. Stock index futures had plunged nearly 2% Thursday night following initial reports of the Israeli strikes around 8:00 p.m. ET.
The surge in defense names reflects both the immediate geopolitical risk and growing investor interest in long-term defense spending. RTX shares are now up more than 35% over the past year, while Northrop Grumman has gained nearly 20%. Lockheed Martin has seen a more modest 3.9% rise in the same period.
Meanwhile, Palantir Technologies (NYSE: PLTR), a defense tech firm that straddles the AI and military sectors, traded flat on Friday but remains the top performer in the S&P 500 year-to-date, with a staggering 480% gain over the past 12 months.
The latest violence stems from what Israel described as a “preemptive strike” on Iran, targeting its nuclear infrastructure. The airstrikes, which continued into Friday, reportedly killed 78 people in Tehran, including members of Iran’s top military leadership. Iran’s foreign minister condemned the strikes as a “declaration of war,” and Supreme Leader Ayatollah Ali Khamenei warned that Israel should “expect severe punishment.”
In response, U.S. President Donald Trump urged Iran to negotiate. In a post on Truth Social, Trump said, “There has already been great death and destruction, but there is still time… Iran must make a deal, before there is nothing left.”
While Trump’s administration has proposed a $1 trillion defense budget, analysts note the fiscal 2026 plan may fall short. Nevertheless, with geopolitical instability on the rise, defense stocks continue to draw investor attention as a hedge against global uncertainty.
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