Shares of industrial stocks tracked the broad market higher with defense stocks leading the way while materials and manufacturers trailed close behind as investors reckoned President-elect Donald Trump will focus on strengthening the U.S. military ahile punishing foreign raw materials and consumer goods with tarrifs.
Lockheed Martin ( (LMT) ) rose almost 6%, Raytheon added 7.5%, and other defense contractors including Northrop Grumman ( (NOC) ) and General Dynamics (GD) rose more than 5% each on the prospect of a Trump presidency and, as importantly, Republican control of both houses of Congress. Cowen & Co. analyst Roman Schweizer ahead of the vote said that defense spending was likely to increase no matter who won the White House, but the makeup of Congress would determine how easily a budget deal is reached and what spending it contained.
Among the losers in the pre-market was Kansas City Southern ( (KSU) ), which fell 11%. The railroad gets about half of its revenue from Mexico and could be impacted if Trump follows through on his anti-NAFTA rhetoric. The election and fears of a slowdown in Mexico also make KSU a less likely takeover target. Railroads CSX ( (CSX) ), Norfolk Southern ( (NSC) ) and Umnion Pacific all also rallied. Large transport firms were mixed as United Parcel Service ( (UPS) ) closed up 1.5% and FedEx ( (FDX) ) slipped 0.1%.