Defense companies led Wall Street on Thursday after President Trump proposed increasing military spending to one point five trillion dollars by twenty twenty-seven. The proposal aims to build a “Dream Military” to address what the administration describes as dangerous global times. While contractors like Lockheed Martin and L3Harris saw their stock prices rise, the broader market remained nearly flat due to losses in the technology sector. A new executive order was also introduced to increase accountability by banning stock buybacks for contractors that fail to meet production goals. Meanwhile, oil prices fluctuated following leadership changes in Venezuela and discussions regarding national security interests in Greenland. Investors are now awaiting the formal budget process and the implementation of new Pentagon contract rules.
Defense-industry companies saw significant gains on Thursday as the broader stock market remained mostly quiet. While many parts of Wall Street did not move much, makers of weapons and military equipment jumped higher. This shift happened after President Donald Trump announced a plan to sharply increase the amount of money the government spends on the military. Investors reacted quickly to the news, sending shares of several major contractors upward during the trading day.
The official rationale for this plan is to build what the President calls a “Dream Military.” He stated that he wants to increase U.S. military spending to $1.5 trillion by the year 2027. This would be a very large increase from the current budget of $901 billion. The administration explained that this extra funding is necessary because the country is facing troubled and dangerous times. The goal is to ensure the nation has the best equipment and technology available to protect its interests.
On the floor of the New York Stock Exchange, the impact was easy to see. L3Harris Technologies saw its stock price jump by 5.2%. Lockheed Martin, another major player in the defense sector, saw its shares climb by 4.3%. Northrop Grumman also joined the rally, adding 2.4% to its value. These gains were a welcome change for these companies. Just one day earlier, their stocks had dropped after the President complained that some contractors were making military equipment too slowly. The new spending proposal seemed to restore confidence among those who trade these stocks.
Not every defense company saw the same level of success. RTX, a company that has faced specific criticism from the administration, lagged behind its rivals. Its stock only inched up by 0.8%. The President had previously called RTX the slowest company when it comes to increasing the volume of equipment they produce. This shows that while the government is ready to spend more, it is also looking closely at how well these companies perform their jobs.
The broader market did not share the same excitement as the defense sector. The S&P 500 index barely moved at all. It inched up by less than 0.1%, which is a very small change. This index added just 0.53 points to close at 6,921.46. Even with this tiny gain, the S&P 500 stayed near the all-time high it reached earlier in the week. The Dow Jones Industrial Average rose by 270.03 points, or 0.6%, to finish at 49,266.11. However, the Nasdaq composite fell by 104.26 points, or 0.4%, to end at 23,480.02.
Technology stocks were one of the main reasons the overall market stayed flat. Nvidia, a very large and important company, was a heavy weight on the S&P 500. Its stock dropped by 2.2%. This move took back some of the huge gains the company made last year. When big tech companies like Nvidia lose value, it often makes it hard for the whole market to move higher, even when other sectors like defense are doing well.
Several economic reports were released on Thursday that gave a mixed picture of the U.S. economy. One report showed that the number of workers applying for unemployment benefits rose last week. This can be a sign that more people are being laid off from their jobs. However, the increase was not larger than what economists had expected. Another report found that U.S. workers improved their productivity during the summer months by more than expected. Additionally, the trade deficit for the month of October shrank unexpectedly, which is usually seen as a positive sign for the domestic economy.
Energy prices also saw some big moves. Oil prices jumped on Thursday, continuing a pattern of ups and downs. This volatility started after the leader of Venezuela was ousted last weekend. A barrel of benchmark U.S. crude rose by 3.2% to reach a price of $57.76. Brent crude, which is the international standard, went up by 3.4% to settle at $61.99 per barrel. Venezuela has a lot of oil, but experts say it would take billions of dollars in new investment to fix the country’s old infrastructure before they could produce much more.
The practical details of this policy change involve a new executive order signed on Wednesday. This order tells the Pentagon to change how it writes future contracts with private companies. These new contracts must include a rule that stops companies from buying back their own stock if they are not performing well on their government work. This ban applies during periods of underperformance. This policy directly affects large contractors who fail to meet the government’s expectations for speed and volume.
In markets outside of the United States, the results were mostly weak. Japan’s Nikkei 225 index dropped by 1.6%, which was one of the biggest moves in the world on Thursday. In Hong Kong, the Hang Seng index fell by 1.2%. European markets moved only a small amount. In the bond market, the yield on the 10-year Treasury note rose to 4.18% from 4.15% late Wednesday. Higher yields in the bond market can sometimes put pressure on the stock market.
Investors will continue to watch how these new spending plans move through the government. The next steps will involve the formal budget process and more details from the Pentagon on how the new contract rules will be enforced. Wall Street will be looking for signs of how these changes affect the long-term profits of the nation’s largest defense contractors.
Jordan Lee serves as the Senior Correspondent for Wall Street, Finance, and Monetary Systems at Just Right News. Based in the heart of the world’s financial capital, New York City, Lee brings a sharp, principled eye to the complex mechanisms that drive the global economy. His reporting is defined by a commitment to fiscal responsibility, the defense of the free market, and a deep-seated belief that a transparent monetary system is the bedrock of a free society.
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