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GovCon Index Marks 1st Weekly Win in 2025, Posts 7th Consecutive Daily Gain

Executive Mosaic’s GovCon Index marked its first winning week in 2025 after seven losing weeks since the last week of November 2024. Also, the index, which tracks the stock performances of 30 major government contractors, rose +0.32% on Friday to $5,021.18 for its seventh consecutive daily gain.

Wall Street’s major stock benchmarks rallied and finished strong on Friday. The Dow Jones Industrial Average and S&P 500 advanced 3.7% and 2.9% week-on-week, while the tech-heavy Nasdaq Composite added +2.4%. However, the headwind for stocks was the ten-year Treasury yield rising to a 14-month high of 4.8%. It retreated to 4.61% before the weekend.  

Solid Performance

GovCon Index’s solid performance for Jan. 13-17, including positive returns in five days, resulted in a +3.94% weekly gain. Year-to-date, the index representing the government contracting sector is up +3.8%. It topped $5,000 on Thursday, the first time since Dec. 10.

Palantir Technologies (Nasdaq: PLTR), GCI’s winningest stock in 2024, lost -4.55% in the last 10 trading days due to a downgrade by Morgan Stanley (NYSE: MS) on Jan. 6. Still, the AI stock snapped the downturn, gaining +6.71% in five days last week. At $71.77 per share, the trailing one-year price return is +334.18%.

However, Kratos Defense & Security Solutions (Nasdaq: KTOS) and V2X (NYSE: VVX) were the week’s top two gainers, with +14.47% and +13.17%, respectively. On mid-week, Kratos announced securing a contract for hypersonic system program that could potentially reach $100 million. The defense company recently won a hefty $1.45 billion contract from the Department of Defense to advance testing for hypersonic technology.

On Tuesday, Boeing (NYSE: BA) declined 2.03% after reporting 348 commercial plane deliveries in 2024 compared to 528 in 2023, a 51.7% year-over-year drop. Defense deliveries in Q4 2024 were 36 planes versus 54 from a year ago.

No Rush on Rate Cuts

The Q4 earnings season is still early, although the giant banks have reported impressive financial results. Meanwhile, the Federal Open Market Committee will hold its first meeting in 2025 on Jan. 28-29. Market analysts believe that the strong economic growth and a resilient labor market reinforce the stand of Fed officials not to rush rate cuts.

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