U.S. defense equities surged in pre-market trading following former President Donald Trump's announcement of a proposed $1.5 trillion defense budget for fiscal year 2027, signaling a major shift in national security spending priorities. The move triggered broad-based gains across key defense contractors and aerospace firms.
- Proposed $1.5 trillion defense budget for FY2027—an increase of 40% from current projections
- Lockheed Martin, Northrop Grumman, Raytheon, and General Dynamics rose 5.2% to 8.7% in pre-market trading
- Boeing shares jumped 6.4% amid renewed prospects for defense aircraft and missile contracts
- $420 billion allocated to new weapons development, $270 billion to advanced tech like hypersonics and AI
- Market reaction reflects heightened confidence in defense spending expansion under potential Trump administration
- European defense firms like Airbus and BAE Systems also saw gains, signaling global investment momentum
Major defense contractors witnessed sharp gains in pre-market trading after Donald Trump unveiled a sweeping proposal for a $1.5 trillion military budget in fiscal year 2027 during a public address in New York. The plan, part of a broader national security platform, would represent a 40% increase over the current projected defense spending of $1.07 trillion for FY2026. The announcement sparked immediate investor enthusiasm, with shares of Lockheed Martin (LMT), Northrop Grumman (NOC), Raytheon Technologies (RTX), and General Dynamics (GD) all rising between 5.2% and 8.7% in early trading. Boeing (BA) also saw a 6.4% jump, driven by renewed optimism about future defense aircraft orders and missile systems production. The proposed budget includes $420 billion for new weapons development, $310 billion for personnel and operations, and $270 billion allocated to advanced technology initiatives such as hypersonic weapons, artificial intelligence integration, and space-based defense systems. Analysts noted that the scale of the proposal would require significant legislative changes and funding reallocations, but the market reaction suggests strong confidence in the political viability of such a plan under a potential second Trump administration. Investors are particularly focused on the implications for long-term contracts and R&D investments. The $1.5 trillion figure, if enacted, would mark the largest peacetime military budget in U.S. history and could elevate defense spending as a dominant component of federal fiscal policy for the next decade. This shift has also prompted a reevaluation of defense supply chains, with firms like Raytheon and L3Harris Technologies (LHX) expected to benefit from expanded procurement timelines and increased production capacity. The rally extended beyond U.S. borders, with European defense stocks also rising, led by Airbus (EPA: AIR) and BAE Systems (LSE: BA), reflecting global investors' anticipation of a renewed arms race and increased defense cooperation among NATO allies. The market’s reaction underscores growing investor focus on geopolitical risk and national preparedness as central drivers of defense sector valuation.