Trump Administration Orders Sweeping Pentagon Cuts: Palantir, Lockheed Martin, General Dynamics Among Stocks On Watch
The Trump administration has ordered senior officials at the Pentagon and throughout the U.S. military to prepare for sweeping budget cuts.
The Details: According to a Washington Post report, Defense Secretary Pete Hegseth, on Tuesday, sent a memo ordering senior officials to develop plans to cut 8% of the defense budget in each of the next five years.
The order states plans for proposed cuts should be drawn up by Feb. 24 and includes many notable exemptions, including the modernization of nuclear weapons and missile defense, the acquisition of submarines, drones and other munitions.
"The time for preparation is over — we must act urgently to revive the warrior ethos, rebuild our military, and reestablish deterrence," Hegseth wrote, according to the Washington Post which obtained the memo.
"Our budget will resource the fighting force we need, cease unnecessary defense spending, reject excessive bureaucracy, and drive actionable reform including progress on the audit," Hegseth wrote.
Stocks To Watch: Shares of companies in the defense sector are on watch as details of any proposed cuts are not immediately clear.
Due to the above-listed exemptions which include submarines, missile defense and other munitions, many of the legacy defense contractors may not be the focus of proposed spending cuts but should still be monitored.
Lockheed Martin Corp. (NYSE:LMT), RTX Corp. (NYSE:RTX), General Dynamics Corp. (NYSE:GD), and Northrop Grumman Corp. (NYSE:NOC) dipped following the Washington Post report but recovered quickly.
However, shares of Palantir Technologies, Inc. (NASDAQ:PLTR) fell more than 10% following the news. The large drop may have been due to the stock's recent run which produced gains of nearly 250% over the past six months.
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