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Here's Why Northrop Grumman Shares Moved Lower With Lockheed Martin

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Here's Why Northrop Grumman Shares Moved Lower With Lockheed Martin

Defense sector investors seemed quite happy with Donald Trump’s election as the next U.S. president. However, this changed last week when the president-elect said the costs for the new 747 Air Force One fleet Boeing Co (NYSE: BA) is building for future presidents are “out of control,” suggesting he would cancel the order.

Stocks Fall Once More On Trump Tweets

On Monday, Trump's dissatisfaction toward the defense sector seemed even more evident. This time, the subject of his indignation was Lockheed Martin Corporation (NYSE: LMT). He tweeted, “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th,” sending the stock down about 2.47 percent. Shares traded lower but then rebounded in the afternoon.

Nonetheless, it was not only Lockheed Martin that was tumbling on Monday trading. Other aerospace and defense stocks including BAE Systems PLC (ADR) (OTC: BAESY), Raytheon Company (NYSE: RTN) and L-3 Communications Holdings, Inc. (NYSE: LLL) also slipped on the first day of the week.

None of these companies were the most affected, though. In fact, it was Northrop Grumman Corporation (NYSE: NOC) that felt the hardest blow, losing 2.67 percent on Monday’s regular trading session.

Why Northrop?

Northrop supplies the center fuselages for Lockheed's F-35s. And, “[While] as a subcontractor, it isn’t taking the same hit to its cash flow that Lockheed is,” a recent Washington Business Journal article explicated, Monday’s news is still not good.

Benzinga reached out to the company for comment, but a spokesperson replied, “We refer you to Lockheed Martin, the F-35 prime contractor, regarding this matter.”

 

Related Articles (LMT + NOC)

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