Executive Mosaic’s GovCon Index climbed 5 percent for a record one-day gain and closing value Wednesday as investors made large buys of shares in large defense primes on expectations of increased defense spending under incoming Pres. Donald Trump after his watershed election win Tuesday.
The U.S. stock bellwether S&P 500 composite index reversed an early negative open to close up percent on gains by financial and healthcare shares after futures shed a majority of pre-open losses overnight after Trump clinched the White House and pre-election pricing by traders on a Hillary Clinton win.
Financials led six S&P sectors higher with utilities the largest lagger of five decliners as U.S. stocks showed a clear division between advancers and decliners.
GovCon Index gainers overwhelmingly outnumbered laggers at a 9-to-1 ratio, six added at least $10.00 and seven of its 11 S&P 500 stocks ended among the GCI’s top 10 net gainers with five co-listed companies above that $10.00 barrier.
In addition, eight of the GovCon Index’s 30 companies hit 52-week highs during the session as reported in our special intraday coverage on the large spike in the GCI itself and among the large-cap defense prime stocks.
Military shipbuilder Huntington Ingalls Industries (NYSE: HII) led all GovCon Index net advancers as defense-oriented investors honed on that company in light of Trump’s campaign statement to increase the Navy’s active vessel fleet to 350 from the current 272.
Huntington Ingalls is the Navy’s exclusive builder of nuclear-powered aircraft carriers and also constructs surface combatant ships for the service branch.
Fellow Navy submarine and surface ship maker General Dynamics (NYSE: GD) also climbed and ended seventh for net gainers.
Aerospace and defense contractors Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC) finished respectively second and third for net gainers as both companies have indicated interest in the military’s nuclear modernization effort.
Pharmaceutical services provider McKesson Corp. (NYSE: MCK) closed fourth-best for net advancers and rose in conjunction with the S&P healthcare index’s gain of almost 4 percent and defense technology maker L-3 Communications (NYSE: RTN) rounded out the GCI’s top five gainers.
Missile manufacturer Raytheon (NYSE: RTN) ended sixth at a gain of $10.120 to $146.71 and was the most active GovCon Index stock at 7.05 million shares traded to exceed the three-month average by four times.
All 30 GovCon Index companies traded at a volume above their respective three-month averages.
Vectrus (NYSE: VEC) closed as the GovCon Index’s largest percentage gainer after the government services contractor said the U.S. Army would ask for revised proposals from bidders on a large Kuwait-based logistics contract the company lost in a September recompete award.
That program is the largest in Colorado Springs-based Vectrus’ portfolio and the company added it continues to await the outcome of its protest on another Army logistics contract awarded to a competitor that represents the company’s second-biggest source of revenue.
Tuesday’s gain pared Vectrus’ year-to-date loss to 18.29 percent and 12-month decline to 21.38 percent but the stock is well short of its $33.74 close on Aug. 31, the last prior to both contract losses.
Other notable activity in the GovCon Index surrounded technology services provider CGI Group (NYSE: GIB), which added 4.57 percent to $50.14 after the Montreal-based company posted fourth quarter earnings and revenue above Wall Street’s consensus forecast before markets opened.
CGI CEO George Schindler told analysts in a subsequent conference call the company sees no large impacts to its U.S. federal government business post-election and expects agencies to use existing contract vehicles for ongoing initiatives.
CGI reported approximately $1.86 billion in U.S. federal revenue over the 12 month-period ended Sept. 30 to represent approximately 13.16 percent of total corporate sales.
Government health and human services provider Maximus (NYSE: MMS) hit a 52-week low during Wednesday trade and weighed on the GovCon Index to close as its lone and largest decliner by 16.94 percent to $45.25.
Maximus holds contracts to support the implementation of the Affordable Care Act, which Trump said in his campaign he would work to repeal.
Montreal-based aerospace and defense contractor CAE (NYSE: CAE) ended at no change and is scheduled to report quarterly financial results Thursday.
Federal technology services contractor and S&P 500-listed CSRA (NYSE: CSRA) added 3.55 percent Wednesday and is scheduled to report after the close Wednesday.
|Index||Value||Net Change||% Change|
|S&P 500||2, 163.26||+23.70||+1.11%|
|Dow Jones Industrial Average||18, 589.62||+256.95||+1.40%|
|Advancing GovCon Index Issues||28|
|Declining GovCon Index Issues||1|
|Unchanged GovCon Index Issues||1|