Editor
Defense stocks led a broad market charge on Thursday after President Donald Trump signaled a massive expansion of federal spending, calling for a $1.5 trillion defense budget by 2027 to build what he described as a “Dream Military.”
The announcement, delivered via a morning Truth Social post, caught traders by surprise and sent shares of major aerospace and security firms into a vertical climb. For a sector that had been bracing for a potential belt-tightening under new efficiency initiatives, the news felt like a sudden rush of oxygen.
A Banner Day for Big Defense
The reaction from the “Beltway Bandits” was immediate. Northrop Grumman led the pack, soaring 8.5%, while Lockheed Martin and L3Harris Technologies weren’t far behind, both gaining 8%. Heavyweights General Dynamics and RTX also saw healthy bumps of roughly 5%.
“We’re looking at a paradigm shift,” says Marcus Vane, a senior defense analyst at Global Capital Markets. “Wall Street was worried about budget cuts, but a $1.5 trillion figure suggests the taps aren’t just staying open—they’re being replaced with fire hoses. Whether the deficit can handle it is a question for another day; right now, the market is buying the growth.”
Tech and Retail Defy the Gravity of High Interest Rates
Away from the Pentagon’s wishlist, the tech sector saw a massive win from Applied Digital. The company’s fiscal second-quarter results blew past the consensus, posting $127 million in revenue against the $88 million analysts expected. Perhaps more impressively, they broke even on a per-share basis, defying the 12-cent loss the street had penciled in.
Management’s hint that they are in “advanced discussions” with another investment-grade hyperscaler served as the cherry on top, sending shares up nearly 5%. It seems the appetite for high-performance computing infrastructure remains insatiable.
In the retail aisles, Gap managed to claw back some ground, gaining 4% after UBS upgraded the stock to a buy. The bank’s logic? An “inflection point” is coming. It’s a bold call given the fickle nature of consumer spending, but one that investors were happy to bet on today.
Mixed Signals in Energy and Industrials
Not everyone joined the party. Shell slipped more than 2% after a sobering fourth-quarter update. The energy giant warned that its chemicals segment is flagging and that its trading and optimization profits—usually a massive cash cow—would be “significantly lower” than last quarter. It’s a reminder that even the biggest players aren’t immune to the cyclical cooling of global manufacturing.
Alcoa also felt the sting of a JPMorgan downgrade, dropping 3.8%. Analysts cited the looming “T-word”—tariffs. With trade policy remaining a wild card, the aluminum giant’s valuation suddenly looks a lot more fragile to the institutional crowd.
Resilience in the “Sin Stocks” and Power
Meanwhile, Constellation Brands proved that people still want their Modelo, regardless of the macro-environment. The company posted adjusted earnings of $3.06 per share, easily topping the $2.63 estimate.
And for those looking for a bargain, Generac rose 2% after Citi analysts suggested the stock’s recent 20% slide was “overdone.” With a projected 45% upside, the power generator maker is becoming a favorite “buy the dip” candidate for 2026.
As we head into the closing bell, the narrative is clear: Washington’s policy shifts are currently the primary engine for market volatility. Whether these gains in defense stocks hold will likely depend on how much of the $1.5 trillion proposal can actually clear a skeptical Congress.
