Defense ETFs Down as Lockheed Tumbles, Northrop Soars
- Lockheed Martin Corp (LMT) dropped 8% Tuesday, while Northrop Grumman Corp (NOC) surged by the same amount.
- The moves suggest that investors may be reassessing valuations and locking in profits.
Two of the biggest defense contractors in the United States moved in opposite directions on Tuesday after reporting earnings, sending ripples through aerospace and defense ETFs.
Shares of Lockheed Martin Corp. (LMT) dropped 8%, while shares of Northrop Grumman Corp. (NOC) surged by the same amount. Both companies are major holdings in the iShares U.S. Aerospace & Defense ETF (ITA), which has $8.8 billion in assets under management. NOC is the fund’s eighth-largest holding at 4.4%, while LMT is the ninth-largest at 4.2%.
“LMT’s 2Q25 results were worse than Street expectations as program charges not only impacted Aeronautics but also the RMS segment,” analysts at Truist Securities said. Meanwhile, “NOC delivered with stronger-than-expected results while also slightly raising its full-year EPS and FCF guidance,” RBC Capital Markets analysts noted.
ITA Falls on Possible Profit-Taking
While the opposing moves mostly canceled each other out, ITA still fell 1.2% intraday—likely due to broader market weakness and possible profit-taking after a strong year for defense stocks. Even after Tuesday’s drop, ITA is up 33% year to date, far outpacing the 7.8% gain for the S&P 500.
Another fund impacted by the moves was the Global X Defense Tech ETF (SHLD), which fell 1.3% on the day. SHLD has a larger position in LMT (7.4%) and a similar weight in NOC (4.4%). The fund has had a standout year, gaining 62.7% in 2025, thanks to its focus on next-generation defense technologies and a global approach that goes beyond traditional U.S.-centric aerospace names.
ITA & SHLD Holdings
Source: etf.com & FactSet Data
Meanwhile, the Select STOXX Europe Aerospace & Defense ETF (EUAD), the second-best-performing non-leveraged ETF of the year with a 76.3% return, also declined 1.4% on Tuesday. Though EUAD does not hold LMT or NOC, its pullback reflected broader sentiment across the defense sector.
With such strong year-to-date gains, Tuesday’s moves suggest that investors may be reassessing valuations and locking in profits as earnings season ramps up across the defense industry.
