Stock traders faced heightened volatility as President Donald Trump announced plans to increase defense spending by $78 billion and introduce sweeping housing reforms, prompting immediate reactions across defense contractors and real estate sectors.
- President Trump announced a $78 billion defense spending increase for fiscal year 2027.
- The plan includes procurement of 120 F/A-18F Super Hornets and 40 B-21 Raider bombers.
- A new housing initiative aims to deliver 2.3 million affordable rental units by 2031.
- Lockheed Martin (LMT) shares gained 5.2%, Northrop Grumman (NOK) rose 4.8% on defense news.
- Home Depot (HD) fell 1.9%, PulteGroup (PHM) declined 3.1% on housing policy concerns.
- 10-year Treasury yield rose to 4.72% amid expectations of higher federal borrowing.
Financial markets swung sharply on Monday after President Donald Trump unveiled two major policy initiatives during a speech at the National Defense University. The first, a $78 billion boost to the Pentagon’s budget over the next fiscal year, aims to accelerate the procurement of advanced fighter jets, including 120 F/A-18F Super Hornets and 40 B-21 Raider bombers. The second initiative involves a new federal housing initiative to expand affordable rental units by 2.3 million over five years, targeting urban centers with the highest rent inflation. The defense spending announcement sent shares of Lockheed Martin (LMT) up 5.2%, while Northrop Grumman (NOK) rose 4.8% as investors priced in increased production timelines. Raytheon Technologies (RTX) gained 3.7%, reflecting expectations of expanded missile development contracts. The real estate sector reacted more cautiously: shares of Home Depot (HD) dipped 1.9%, while construction-focused firms like PulteGroup (PHM) declined 3.1%, amid concerns over regulatory changes and potential tax shifts tied to the housing plan. Equity indices reflected the split sentiment: the S&P 500 lost 0.6% on the day, while the Nasdaq Composite dropped 1.1%. The Russell 2000, heavily weighted in small-cap industrial and construction firms, fell 1.4%, signaling investor unease over the dual implications of fiscal expansion and regulatory uncertainty. Treasury yields rose modestly, with the 10-year benchmark climbing to 4.72%, reflecting expectations of higher government borrowing. The developments come amid a broader geopolitical backdrop, including tensions in the Pacific region and domestic protests in Portland, Oregon, which prompted federal deployment of 100 California National Guard personnel—though a federal court later ruled the deployment exceeded constitutional limits under the Posse Comitatus Act.