Defense Stocks Rally As Trump Pledges $1.5T Military Budget: What's Moving Markets Thursday?

Defense stocks surged Thursday, erasing the prior session's losses, after President Donald Trump floated a sharp increase in U.S. military spending that caught Wall Street's attention.

Trump said the federal military budget could rise from the Congress-approved $900 billion to $1.5 trillion by 2027.

The iShares U.S. Aerospace & Defense ETF (NYSE:ITA) rose 1.4%, while the State Street SPDR Aerospace & Defense ETF (NYSE:XAR) soared 3.3%. The gains fully reversed Wednesday's pullback, when defense names sold off after Trump ordered to halt dividends and share buybacks.

Small-cap contractors led the charge. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) jumped 18%, while Red Cat Holdings, Inc. (NASDAQ:RCAT) gained 12%. Karman Holdings Inc. (NYSE:KRMN) rose 10%.

Among larger names, Leonardo DRS Inc. (NASDAQ:DRS) climbed 9%, Huntington Ingalls Industries Inc. (NYSE:HII) added 7% and L3Harris Technologies Inc. (NYSE:LHX) advanced 6%.

By midday in New York, small caps outperformed their large-cap peers. The Russell 2000 rose nearly 1%, while the S&P 500 edged 0.2% higher to 6,940 points.

Sector performance was mixed. Consumer staples led the session, while technology stocks lagged. The Nasdaq 100 slipped 0.5%, pressured by weakness in chip producers.

Sandisk Corporation (NASDAQ:SNDK), Seagate Technology Holdings plc (NASDAQ:STX) and Western Digital Corporation (NASDAQ:WDC) each posted steep double-digit declines.

Wednesday's selloff in residential real estate-focused asset managers paused. Shares of Blackstone Inc. (NYSE:BX) rose 0.9% after tumbling more than 5% the prior session following Trump's tweet targeting institutional buyers of single-family homes.

Commodities traded mixed. Gold held steady at $4,460 an ounce, while silver slid 2.8% to $76. Oil climbed 1.9% to $57 a barrel.

Cryptocurrencies weakened. Bitcoin (CRYPTO: BTC) slipped toward $90,000, eyeing a third straight day of losses.

According to Benzinga Pro data:

• The Vanguard S&P 500 ETF (NYSE:VOO) flattened at $634.19.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) moved 0.5% higher to $492.61.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) eased 0.7% to $619.85.
• The iShares Russell 2000 ETF (NYSE:IWM) rose 1% to $257.94.
• The Consumer Staples Select Sector SPDR Fund (NYSE:XLP) outperformed, up 2.3%; the Technology Select Sector SPDR Fund (NYSE:XLK) lagged, down 1.7%.

Russell 1000's Top 5 Gainers And Losers On Thursday