What Happened?
Shares of security and aerospace company Northrop Grumman (NYSE: NOC) jumped 3.9% in the afternoon session after President Trump called for a major increase in the U.S. military budget.
The stock's move was part of a whipsaw reaction in the defense sector. Shares had fallen sharply in the previous session after Trump threatened to block dividends and stock buybacks for defense contractors. However, he later proposed boosting the country's military spending by more than 50% to $1.5 trillion, causing investors to rush back into the sector. Adding to the positive news, Northrop Grumman also secured a $94.3 million contract from the U.S. Navy to develop a new solid rocket motor for its extended-range missile programs. The company also received an award from the U.S. Marine Corps for a tactical aircraft program.
After the initial pop the shares cooled down to $595.72, up 3.2% from previous close.
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What Is The Market Telling Us
Northrop Grumman’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 14.6% on the news that the company reported weak results for the first quarter of 2025: sales came in lower than expected, and profits fell well short of what Wall Street was hoping for.
What stood out was a big hit in its aircraft business: Northrop booked a $477 million loss on its B-21 bomber program, due to rising costs from production changes and higher material prices. As a result, margins took a hard fall. The top line wasn't any better. Total sales dropped 7% from the previous year, mostly because of big declines in its space and aircraft units, as older programs wound down and new ones didn't ramp up fast enough. This led to earnings per share falling significantly, even though parts of the business like Mission and Defense Systems grew.
Looking ahead, Northrop stuck to its full-year sales and cash flow outlook, but it cut its profit forecast by more than 10%. It also struck a cautious tone around trade tariffs. Overall, the quarter came up short. Separately, competitor Raytheon reported weak earnings and gave underwhelming guidance, raising concerns about the defense sector's ability to hold up amid escalating trade tensions.
Northrop Grumman is up 1.7% since the beginning of the year, and at $595.72 per share, it is trading close to its 52-week high of $637.95 from October 2025. Investors who bought $1,000 worth of Northrop Grumman’s shares 5 years ago would now be looking at an investment worth $2,066.
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