Defense Stocks Losing Some of That Trump Shine After Koreas Meet

(Bloomberg) -- Since Donald Trump was elected president, the S&P 500 Aerospace & Defense Index hasn’t closed below its 100-day moving average. That’s set to change Friday, after an historic agreement to end the Korean War depressed stocks of U.S. defense contractors.

"There will be an inevitable focus on spending cuts, and defense may be a target," Greg Valliere, chief global strategist at Horizon Investments, wrote in a note. Defense spending and the stocks that benefit "both could level off in the next few years."

Raytheon Co. is down as much as 3.9 percent and on pace to close lower for a fourth straight day. General Dynamics Corp., Northrop Grumman Corp. and Lockheed Martin Corp. are each down at least 2 percent.

Even with recent declines, the aerospace and defense index remains higher by about 56 percent since the Nov. 8, 2016, election, about double the gain in the broader stock market.

--With assistance from Felice Maranz

To contact the reporter on this story: Jeremy R. Cooke in Mount Pleasant, S.C. at jcooke8@bloomberg.net.

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Christiana Sciaudone

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