Howmet Aerospace Inc. (NYSE:HWM) shares surged after the aerospace supplier posted stronger-than-expected quarterly results and raised its financial outlook, offering a boost to aerospace and defense ETFs that have faced pressure from rising geopolitical tensions and oil-price volatility.
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Howmet reported first-quarter adjusted earnings of $1.22 per share on revenue of $2.3 billion, beating Wall Street expectations for earnings of $1.11 per share and sales of $2.2 billion. The company also increased its 2026 sales guidance by $550 million to about $9.7 billion and lifted earnings guidance to roughly $4.94 per share, above analyst estimates.
CEO John Plant said commercial aerospace backlogs remain at record levels, while demand for engine spare parts and defense-related products continues to strengthen. Although Plant acknowledged that the Iran conflict could eventually affect the sector, the company said it has not yet seen meaningful weakness in customer demand or outlook.
Aerospace ETFs Get A Lift
The strong earnings report helped improve sentiment across aerospace and defense ETFs, which have been facing losses due to volatility tied to Middle East tensions and fears that higher oil prices could pressure margins.
The iShares U.S. Aerospace & Defense ETF (BATS:ITA) gained alongside aerospace stocks, while the SPDR S&P Aerospace & Defense ETF (NYSE:XAR) and Invesco Aerospace & Defense ETF (NYSE:PPA) also advanced between 2.5% and 4.5% at Wednesday’s market close as investors welcomed signs that aerospace demand remains resilient. On Thursday, the prices remained largely flat.
The gains reflected relief that the Iran conflict has not yet materially disrupted aerospace fundamentals, particularly for suppliers tied to commercial aircraft production and defense spending.
Long-Term Industry Tailwinds Remain Intact
Howmet’s results also reinforced broader optimism surrounding the aerospace supply chain.
Commercial aerospace companies continue to benefit from multiyear aircraft backlogs at Boeing Co (NYSE:BA) and Airbus SE (OTC:EADSY), while airlines globally are still investing in maintenance, replacement engine parts and fleet modernization. Meanwhile, rising defense budgets across the U.S. and Europe continue to support military aerospace demand.
Yesterday’s rally in aerospace ETFs suggests investors may be shifting focus back toward the sector’s long-term growth drivers after recent geopolitical concerns weighed on sentiment. However, given the flat movement of the ETFs today, investors still seem to be cautious and looking for more cues on the sector outlook.
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