Defense Stocks Surge 2.90% as Israel Strikes Iran

Defense stocks experienced a significant surge on Friday, June 13, 2025, as Israel initiated a large-scale military operation against Iran. The operation, which involved 200 Israeli fighter jets striking 100 targets across Iran, targeted key nuclear facilities, military installations, and critical infrastructure. This escalation in Middle East tensions prompted investors to flock to aerospace and defense companies, with major players such as Lockheed Martin, Northrop Grumman, and RTX Corporation posting notable gains.

The defense sector's broad-based rally was driven by Israel’s coordinated attack on Iran, which included strikes on Iran’s main nuclear enrichment facility at Natanz, causing massive explosions. The operation also targeted military installations, including radar systems, surface-to-air missile launchers, and the headquarters of Iran’s Revolutionary Guards in Tehran. Market analysts view the escalating tensions as a catalyst for increased defense spending globally, as nations reassess their security needs amid growing Middle East instability. The targeting of nuclear facilities particularly underscores the strategic implications of the conflict, potentially leading to a renewed focus on missile defense systems, advanced aircraft, and intelligence capabilities.

Historical patterns suggest that sustained geopolitical tensions often translate into multi-year defense budget increases across allied nations. The immediate market response reflects investor confidence in the defense sector’s ability to benefit from heightened security concerns. With oil prices also jumping on the news, the combination of energy and defense sector strength signals market expectations of prolonged regional instability. The timing coincides with ongoing global defense modernization programs, potentially accelerating procurement timelines for advanced military systems.

Lockheed Martin led the defense rally, with its stock climbing to $482.80, a 2.90% gain. The company’s strong performance comes despite recent Pentagon decisions to halve F-35 jet requests, suggesting investors are focusing on broader geopolitical drivers rather than specific program concerns. The company’s market cap stands at $112.97 billion with analyst price targets averaging $525.46.

Northrop Grumman posted solid gains, with its stock increasing to $507.94, representing a 2.18% increase. The company’s advance reflects its strategic positioning in missile defense systems and unmanned aircraft technologies, both critical areas given the nature of the Israeli strikes. The company’s $73.11 billion market cap and 1.86% dividend yield provide additional appeal for defense-focused investors seeking both growth and income.

RTX Corporation gained to $143.44, up 1.74%. The company’s performance showcases its diversified defense portfolio spanning aerospace, missile systems, and radar technologies through its Collins Aerospace, Pratt & Whitney, and Raytheon segments. The company’s recent $647 million radar contract and $1.1 billion missile contract wins position it well for potential increased defense procurement. With a market cap of $191.98 billion and strong free cash flow generation of $5.73 billion, RTX offers substantial scale and financial flexibility.