The major headline on Wall Street last week was President Donald Trump’s decision to use a drone strike to kill Iran’s top general, Qasem Soleimani. Escalating tensions between the U.S. and Iran rattled stocks, but the incident benefited a handful of defense stocks.
Since last Wednesday’s close, shares of Northrop Grumman Corporation (NYSE: NOC) have spiked 9.6%. Crowdstrike Holdings Inc (NASDAQ: CRWD), Lockheed Martin Corporation (NYSE: LMT) and Raytheon Company (NYSE: RTN) are up 6.7%, 6% and 4.1%, respectively.
Sentiment On The Rise
Stocktwits sentiment data confirms the heightened interest in defense stocks following the attack. On Friday, the number of Stocktwits messages mentioning the tickers above jumped from 155 to 554 and bullish sentiment associated with the defense stocks jumped from 82% to 86.5%. This week, message volume has dropped back down to normal levels, but bullish sentiment has risen to 87.4%.
Defense stock investors have had a great week, and some of them may have had a heads-up before the strike occurred.
The Daily Beast reported that Trump told guests at his Mar-a-Lago resort prior to the attack that he was planning a “big” response to Iran “soon.”
For now, defense stock investors are waiting to see how Iran responds. If the U.S. ultimately clashes with Iran, it could mean a big sales boost for companies that supply the military.
Until Iran responds or tensions de-escalate, defense stocks will likely continue to trade at a premium to where they were prior to the attack.
“God the almighty has promised to get his revenge, and God is the main avenger,” Suleimani’s successor Esmail Ghaani said following the strike.
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Photo from Pixabay.