President Joe Biden sent an urgent budget request to Congress on Friday for billions of dollars in military aid for Israel and Ukraine.
Biden said in an Oval Office address Thursday that the funding—including about $61 billion for Ukraine and $14 billion for Israel—was a smart investment that would pay dividends for American security for generations.
The proposed increase in spending spurred a rise in defense stocks. Shares of
Lockheed Martin
(ticker: LMT),
Northrop Grumman
(NOC),
General Dynamics
(GD), and
L3Harris Technologies
(LHX) were all higher, by about 0.6% on average, on a weak day for markets. The
S&P 500
and
Dow Jones Industrial Average
were down about 0.8% and 0.4% as Treasury yields were on the rise.
Shares of the four defense contractors are up about 12% on average since Hamas terrorists attacked Israel several days ago. The S&P 500 is down about 1.4% over the same span.
That leaves the four down about 5% over the past year, trailing the S&P 500 by about 20 percentage points. Budget deficits and government shutdowns have weighed on investor sentiment, despite rising global tensions.
Boeing (BA) and RTX (RTX) shares were lower on Friday, but both have significant commercial aerospace businesses along with defense franchises.
U.S. defense spending is at almost $1 trillion annually, up about 20% over the past five years. Biden’s request amounts to about $90 billion in additional spending. In addition to Ukraine and Israel, there is money for humanitarian assistance, submarines, and Indo-Pacific security. There are also separate requests for border security amounting to almost $14 billion.
Biden’s Oval Office address, which can be re-watched here, could reinvigorate the trend toward increased defense spending in countries around the world, notably in Europe.
In addressing the nation, Biden said making sure Israel and Ukraine succeed is vital for America’s national security. “History has taught us that when terrorists don’t pay a price for their terror, when dictators don’t pay a price for their aggression, they cause more chaos and death and more destruction,” he said.
“They keep going and the cost and the threats to America and to the world keep rising,” Biden added.
Write to Callum Keown at [email protected], Callum Keown at [email protected] and Al Root at [email protected]
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