Today, U.S. President Joe Biden announced another sizable aid package to Ukraine. This time, it’s to the tune of $800 million. Ever since Russia began its invasion of the country in February, the ongoing geopolitical conflict has pushed defense stocks upward. Now as it drags on, this latest federal aid packages points toward another month of growth for the sector.
This latest announcement brings the total value of U.S. military aid for Ukraine to $2.5 billion so far. Defense stocks have risen accordingly and today is no different; many of the United States’ largest producers are trending up. Both Northrop Grumman (NYSE:NOC) and Lockheed Martin (NYSE:LMT) closed the day slightly in the green. Raytheon Technologies (NYSE:RTX) had a marginally better day, rising 0.75%.
All three of these defense stocks have come down from their earlier spikes today, although they have ultimately benefited from the aid news.
What’s Happening with Defense Stocks?
These three companies have been trading well throughout the month. At the end of March, InvestorPlace contributor Muslim Farooque hailed them as some of the sector’s most promising plays, well before today’s aid announcement. Now that investors know the government’s focus on military aid will continue, they can approach these defense stocks with an even more bullish mindset.
InvestorPlace contributor Cristian Docan also sees RTX stock as a “great hedge” for investors looking to protect their portfolios from inflation. Docan notes that the company’s “momentum is unlikely to halt as the war in Ukraine boosts military spending among NATO members.” This logic can also be applied to its competitors; both LMT and NOC have performed similarly well since the conflict broke out. Now, the new aid package means demand for military tech will only increase.
These three companies are positioned well to meet that incoming demand. Investors should also recall that Lockheed and Raytheon have already teamed up on tech being used to defend Ukraine today.
What It Means
Currently, there’s not really an end to Russia’s invasion of Ukraine in sight. As such, investors will likely be doubling down on defense stocks. For as long as the U.S. provides military aid to the country, companies like LMT, RXT and NOC will have plenty of work to do. Recent geopolitical tensions have led to a unpredictable market landscape, but it’s clear that the defense sector could soon rally even further.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.