Wall Street reacts to Trump’s criticism of defense contractors
President Donald Trump criticized U.S. defense contractors for taking too long to produce military equipment and for failing to maintain it, while also paying out dividends and stock buybacks to investors, according to the Associated Press.
In a post on Truth Social, Trump said he would not permit the payouts “at the expense and detriment of investing in Plants and Equipment,” and he added: “Therefore, I will not permit Dividends or Stock Buybacks for Defense Companies until such time as these problems are rectified.”
Trump also focused on executive compensation in the defense industry. He said: “Executive Pay Packages in the Defense Industry are exorbitant an d unjustifiable,” and he said executives would have to build “NEW and MODERN Production Plants,” adding that “no Executive should be allowed to make in excess of $5 Million Dollars.”
The remarks came as Trump proposed a larger military budget. Trump said he had determined that, for the “Good of our Country,” the “Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars.”
The Associated Press said the proposed $1.5 trillion figure represents a major increase from the $901 billion provisioned for 2026.
Proposed boost to 2027 spending drives contractor stocks higher
After the criticism, shares of major U.S. defense contractors initially moved lower, the Associated Press reported. Lockheed Martin shares fell 4.8% before rising 4.3% after the proposal surfaced.
Northrop Grumman shares fell 5.5% and then rose 2.4%. General Dynamics shares lost 4.2% and then gained 1.7%. RTX, the parent of Raytheon that Trump singled out in his social media posts, fell 2.5% before rising 0.8%.
The Associated Press said the stock rebound reflected investor expectations for “more lucrative government contracts down the road.”