Executive Mosaic’s GovCon Index finished +2.37% higher at $4,656.07 Friday to register a second straight winning week. The index, which tracks the stock performances of 30 major government contractors, posted a +3.3% week-on-week gain overall despite three broad market selloffs during the week. It also trimmed the year-to-date loss to -3.87% from -6.83% on Feb. 28.
Tariffs and policy uncertainty caused the roller coaster ride on Wall Street. All the major U.S. stock indexes registered steep weekly losses. The tech-heavy Nasdaq Composite lost -3.5% and is down -5.8% year-to-date, while the Dow Jones Industrial Average (-2.4%) shed 1,039.19 points. It was the worst week for the S&P 500 (-3.1%) since Sept. last year.
Standout performers
The GovCon Index has now recorded three winning weeks out of nine thus far in 2025. Defense stocks have been in a slump since post-election when President-elect Donald Trump announced his intention to implement changes in the government contracting sector. Last month, Defense Secretary Pete Hegseth ordered the military to prepare plans to make drastic budget cuts worth $8 billion over the next five years.
However, defense stocks held steady in the first week of March. 20 of 30 GCI stocks, including prime defense contractors, advanced. There were several standout performers and four notable breakout stocks:
CACI International (NYSE: CACI) gained +15.62% in five days to $387.17. Global financial services firm upgraded its rating to “strong buy” with a price target of $535. In Q2 fiscal 2025, revenue and net income of the professional services and IT company rose 14.5% and 31.1% year-over-year to $2.1 billion and $109.9 million. Contract awards during the quarter reached $1.2 billion, of which 45% are new business.
BAE Systems climbed +13.62% during the week on news of increased military spending across Europe. Expect the British defense and aerospace company to significantly benefit from rising defense expenditures and demand for its weapons and military equipment.
Science Applications International Corporation (Nasdaq: SAIC) was Friday’s top performer with +8.9% and the third-best for the week (+12.61%). On March 3, the Fortune 500 technology company achieved “awardable” status for its contested logistics artificial intelligence solution through the Chief Digital and Artificial Intelligence Office’s Tradewinds Solutions Marketplace. The CDAO Tradewinds Solutions Marketplace offers tools and services for the Department of Defense to accelerate the procurement and adoption of AI, Machine Learning, data and analytics capabilities.
Shipbuilder HII (NYSE: HII) popped +12.36% midweek following Trump’s announcement of a shipbuilding plan to resurrect U.S. shipyards. His “Make Shipbuilding Great Again” aims to overhaul the maritime industry, both the commercial and military sectors. HII gained +11.61 from March 3 to 7 to $195.97.
Market headwinds
Market analysts see the rising uncertainty in tariffs and trade policies as market headwinds. U.S. Federal Reserve Chairman Jerome Powell said the central bank will pause its rate-cutting cycle and await if the tariffs are inflationary. “We are well-positioned to wait for greater clarity, he said.
