Defense stocks moved north following escalating tensions between the nations, with the Dow Jones U.S. Aerospace index rising 0.6% on Jan 2. Major defense companies like The Boeing Co. (BA – Free Report), L3 Technologies, Inc. (LLL – Free Report) and Curtiss-Wright Corporation have gained 0.7%, 0.2%, and 0.7%, respectively.
Defense Eclipses Tech As Well
Considering the solid rally of 2017, let's discuss factors that will warrant an outperformance by aerospace and defense stocks in 2018 as well.
Will the Rally Continue?
There's no denying the fact that Trump's presidency has been a boon for the U.S. defense space, which was grappling with the budget sequestration act implemented by the prior government. While the fiscal 2018 (FY18) defense budget reflecting a noble 10% hike from the FY16 level was a major forerunner for this sector's growth at the beginning of 2017, the FY18 defense policy bill worth $700 billion that extensively surpassed Trump's budget request took stocks to new heights in the second half of the year.
