Defense stocks continued to rise on Friday following President Donald Trump’s social media post outlining plans for a significantly increased defense budget.
Kratos up 10%; Redwire up nearly 9%; Lockheed Martin up 4%; L3Harris, Northrop Grumman up over 3%. The rally came after these stocks plunged during the prior session when Trump threatened to prohibit dividends and stock buybacks for defense companies.
The recovery was sparked by Trump’s statement proposing a $1.5 trillion defense budget for 2027, a substantial increase from the previously discussed $1 trillion figure. In his social media post, Trump indicated the higher budget would "allow us to build the ’Dream Military’" and keep the country "SAFE and SECURE."
Trump suggested that tariff revenue would help fund the increased military spending while also enabling debt reduction and "a substantial Dividend to moderate income Patriots within our Country."
Earlier in the day, defense contractors’ shares had tumbled after Trump criticized them for issuing "massive dividends" and conducting stock buybacks "at the expense and detriment of investing in plants and equipment," declaring that such practices "will no longer be allowed or tolerated."
The rapid reversal in stock performance highlights the market’s sensitivity to policy statements from the incoming administration regarding the defense sector.
