Defense Contractors Win Big Amid U.S.-Iran Tension: 4 Picks
Zacks Investment Research | Jan 07, 2020 10:16PM ET
Escalating tensions in the Middle East may have dragged the broader markets down, but defense companies have gained considerably so far this week and could continue to do so. Rising possibilities of a war between the United States and Iran could well spur demand for military weapons and equipment.
In the past five trading sessions as of Jan 7, the S&P 500 Aerospace & Defense Index gained 3.7% and the Dow Jones U.S. Aerospace & Defense Index climbed as much as 3.6%.
U.S.-Iran on the Brink of a War
Hostilities between the United States and Iran increased following the assassination of the latter’s top military chief Qassem Soleimani on Jan 3. Soleimani was killed in a U.S. airstrike authorized by President Donald Trump.
Since then, Iran has taken certain retaliatory steps again the United States. The Islamic Republic announced that it would no longer abide by a 2015 nuclear deal with global powers and launched more than a dozen ballistic missiles against multiple bases housing U.S. troops in Iraq on Jan 7.
Secretary of Defense Mark Esper said that although the United States doesn’t seek to start a war with Iran, it is prepared to finish one.
The U.S.-Iran relation has been rather rocky given tensions over a 2015 nuclear deal. But hostility spiked last year over U.S. economic sanctions on Iran and its shooting down of a U.S. drone over the Strait of Hormuz.
Last year, large arms’ manufacturers across the industry told investors that the rising U.S.-Iran conflict could be good for business, according to Zacks Investment Research
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