Introduction
Surging ETF Performances
At last check, the iShares U.S. Aerospace & Defense ETF (ITA) saw a remarkable increase of 3.7% in its share prices. Similarly, the Invesco Aerospace & Defense ETF (PPA) witnessed a gain of 3.2%, while the SPDR S&P Aerospace & Defense ETF (XAR) rose by 3.1%, according to FactSet data.
Escalating Conflict
On Sunday, Israel officially declared war following a surprise attack by Hamas. The Associated Press reported that the attack resulted in over 1,000 casualties on both sides. Tragically, the weekend attacks also claimed the lives of at least nine American citizens, as confirmed by the State Department.
Expert Insights
Reflecting on the situation, Sameer Samana, Senior Global Market Strategist at Wells Fargo Investment Institute, conveyed the immense human tragedy associated with the conflict. He emphasized that our world appears to be entering a new phase of heightened geopolitical tensions, when compared to the past decade or two.
Samana believes that as countries seek to replenish their weapons, defense companies are positioned to thrive. Given the circumstances, the defense sector is expected to do exceptionally well in the coming period.
Wells Fargo Investment Institute Upgrades Industrials Sector
Wells Fargo Investment Institute recently upgraded the industrials sector, which includes aerospace and defense stocks, to an “overweight” rating. This decision was based on their observation that geopolitical conflicts are becoming more likely. As a result, defense stocks offer a potential safe haven due to the sustained demand for defense-related goods and services.
Top Holdings in the iShares U.S. Aerospace & Defense ETF
As of October 6, the top five holdings in the iShares U.S. Aerospace & Defense ETF were:
- Boeing (BA)
- RTX Corp. (RTX)
- Lockheed Martin Corp. (LMT)
- Textron Inc. (TXT)
- General Dynamics Corp. (GD)
Stock Performances
General Dynamics saw a significant surge of over 8% on Monday morning. Meanwhile, Lockheed Martin’s stock increased by approximately 7.6%, and RTX experienced a jump of over 4%. On the other hand, Boeing’s stock slightly declined, while Textron shares rose by a substantial 2.1%.
Market Overview
While the broader U.S. stock market was down on Monday, with the Dow Jones Industrial Average slipping less than 0.1%, the S&P 500 shedding 0.2%, and the Nasdaq Composite dropping 0.6%.
