The GovCon Index registered four daily losses in five trading sessions for two straight weeks. On Friday, the index, which tracks the stock performances of 30 major government contractors, fell -1.64% to $4,576.02. This represents four consecutive weekly losses since the last two weeks of January.
Defense stocks have taken a hit because of policy uncertainties and a bearish outlook. On Thursday, U.S. President Donald Trump said defense spending could be reduced by half sometime in the future. The index representing the government contracting sector weakened further following the announcement.
The GovCon Index’s largest weekly loss was -8.52%, registered in the week of Nov. 11-15, 2024. However, with the -4.77% loss from Feb. 10-14, 2025, the year-to-date loss has widened to -5.41%. On Wall Street, the Dow Jones Industrial Average (+0.5%), S&P 500 (+1.5%), and Nasdaq Composite (+2.6%) posted weekly gains.
Decliners overwhelm gainers
The Govcon Index started strong on Monday with +0.74% but went on a tailspin after. Decliners overwhelmed gainers for most of the week as defense stocks tumbled. Kratos Defense & Security Solutions (Nasdaq: KTOS) and AeroVironment (Nasdaq: AVAV) plunged by 17.92% and 13.81% in five days. Fluor Corporation (NYSE: FLR), CACI International (NYSE: CACI) and V2X (NYSE: VVX) round up the top five losers with -13.44%, -11.41% and -10.16%.
BAE Systems was the week’s top performer with +5.87%. The British defense company, also the led gainer on the FTSE100, will present its full-year 2024 results on Feb. 19. Boeing (NYSE: BA) advanced +2.15% for the week on news of higher aircraft deliveries. On Feb. 11, the company announced 45 commercial plane deliveries in Jan. compared to 25 for chief rival Airbus and 27 airplanes in the same month in 2023.
Fiscal challenges
A published article by the Center for Strategic and International Studies said the Department of Defense continues to operate under a continuing resolution as Congress has yet to appropriate funding for fiscal year 2025. According to Seamus Daniels, a defense budget analyst, Congress and the White House face fiscal challenges this year that will impact U.S. defense spending.
