Defense stocks jump after U.S. kills Iranian general
Defense-sector stocks rose Friday on Wall Street after the United States killed Iran’s top military official and braced for escalated conflict in the region.
After the targeted killing in Baghdad of Gen. Qassem Suleimani, head of Iran’s elite Quds Force, Iran’s government vowed “harsh retaliation,” and a U.S. military official said at least 3,000 additional Army troops were deploying to the Middle East.
Even as the broader Standard and Poor’s 500 index lost ground, the S&P Aerospace & Defense Select Industry index climbed 1.8% on Friday.
Northrop Grumman Corp. stock jumped 5.4%. Based in Falls Church, Va., Northrop Grumman makes such aircraft as the B-2 bomber and the upcoming B-21 bomber and is the sole bidder to build the next generation of intercontinental ballistic missiles.
AeroVironment Inc. advanced 6.9%. The Simi Valley company makes small, short-range reconnaissance drones that U.S. soldiers use. The increase in troop deployment to the Middle East could mean more business for AeroVironment, said Ken Herbert, managing director with investment banking and financial services firm Canaccord Genuity.
Close-proximity surveillance is “spot-on the kind of mission that AeroVironment’s drones are very well suited for,” Herbert said. “There’s a lot of people connecting the dots” that the Iran situation could boost sales.
Shares of Lockheed Martin Corp., which makes the F-35 fighter jet, climbed 3.6%. Missile and radar technologies maker Raytheon Co.’s stock rose 1.5%.
Of the major U.S. defense companies, only Boeing Co. saw a decline. Its shares slipped 0.2%. The company is still reeling from the grounding of its 737 Max airplanes after two fatal crashes. The Federal Aviation Administration has not yet cleared the planes to return to the skies. Last month Boeing announced it would pause production of the 737 Max and ousted Chief Executive Dennis Muilenburg. The entire 737 Max debacle is the “most important factor right now for sentiment around Boeing,” Herbert said.
Suleimani was killed in a U.S. airstrike ordered by President Trump. The Trump administration said Suleimani was plotting to kill American soldiers and diplomats in an “imminent attack,” but it has provided few details about such a plot.