Editor’s note: The story has been updated to include additional information.
Shares of Northrop Grumman Corp. (NYSE:NOC), Rtx Corp. (NYSE:RTX), Lockheed Martin Corp. (NYSE:LMT) and General Dynamics Corp. (NYSE:GD) declined 3.69%, 3.30%, 2.66% and 2% during the pre-market trading session on Wednesday, following the Democratic win in the U.S. midterm elections.
Democrats won control of both the House and Senate in the 2026 Midterm elections, delivering a major setback to President Donald Trump and Republicans, highlighting voter dissatisfaction over rising costs and the Iran war.
Democrats Could Derail Trump’s Defense Spending Push
Ukraine’s dollar bonds climbed on hopes that a Democratic sweep in the U.S. midterm elections would improve relations between Kyiv and Washington. Ukraine’s 4.5% notes due in 2034 rose over a cent on the dollar to above 63 cents, the highest in over a month, Bloomberg News reported.
Ukraine largely depends on U.S. intelligence and weapons for fighting against Russia, and a Democratic Congress may prevent any future disruptions on these fronts.
Bloomberg Intelligence analysts warned that Democratic gains could stall defense spending growth from 2027 through 2028, potentially putting future industry growth at risk.
A Democratic takeover of Congress could also give the party greater influence over funding negotiations in healthcare, clean energy and defense. This could complicate Trump’s plan to raise annual defense spending from $1 trillion to $1.5 trillion, particularly amid the ongoing Russia-Ukraine and Iran wars, as the increase requires congressional approval.
Current stopgap funding keeps spending at last year’s levels through Dec. 11.
Byron Callan, managing partner at Capital Alpha Partners, said both parties support replenishing depleted missile stockpiles, but lawmakers could increase scrutiny of expensive defense programs, including the F-35 and Sentinel.
Additionally, a Center for Strategic and International Studies (CSIS) analysis estimates that additional defense funding approved by Congress is more likely to reach $60 billion than the $350 billion requested by the White House, leaving a $290 billion shortfall. Republican divisions over whether to offset military spending with budget cuts or increase defense funding further remain a key obstacle to approving even the smaller amount.
Price Action: Year-to-date, Lockheed Martin stock surged 32.11%, while RTX and General Dynamics have climbed 11.13% and 11.24%, respectively, as per Benzinga Pro.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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