When news breaks of a strike, like Israel hitting Iran, defense stocks surge within hours. In 2024, shares of Lockheed Martin, RTX Corp, and Northrop Grumman spiked right after missile exchanges. This is not random. It is a predictable pattern. Every major conflict pushes defense stocks up.

Who Are These Companies?

Lockheed Martin builds fighter jets, missiles, and defense systems, including the F-35 Lightning II, one of the most advanced aircraft in the world. It also produces missile interceptors and satellites used for global surveillance and defense.
RTX Corp (formerly Raytheon Technologies) manufactures missiles, radar systems, and jet engines. It supplies the Patriot missile and Iron Dome interceptors used in U.S. and Israeli defense.
Northrop Grumman specializes in autonomous drones, stealth bombers, and space defense technology, including systems that support nuclear deterrence and cybersecurity.

How the War Economy Works

Large defense firms do not compete like tech or retail companies. They do not advertise to you or me. Their only buyer is the government. When conflicts increase, so does the expectation of new orders for missiles, drones, and defense systems. That expectation alone can drive up stock prices before a single contract is signed.

War spending looks patriotic, wrapped in the language of national security, but it is also economic stimulus.
The United States spends around $877 billion per year on its military — more than the next nine countries combined. Over half of that goes directly to private defense firms. That is why instability becomes demand. The defense industry thrives not on peace, but on the possibility of war.

The Military-Industrial Complex

President Eisenhower called it “the military-industrial complex,” a feedback loop between defense contractors, politicians, and the Pentagon.

Here is how it functions:

Step	Description	Example
1	Companies lobby Congress for defense spending	$130 million spent on lobbying in 2022 alone
2	Politicians approve bigger budgets (often citing security threats)	$63 billion cut from domestic programs, while defense rose
3	Contractors get massive orders for jets, missiles, and software	Lockheed, Raytheon, Palantir
4	Executives fund campaign donations to the same policymakers	Reinforcing the cycle

Over 50% of top Pentagon officials later take private-sector defense jobs, a revolving door between war planning and profit taking.

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The Media Machine

The loop extends into news. When one network frames a strike as “necessary defense” and another calls it “reckless escalation,” both shape perception. Fear sells attention, and attention supports higher defense budgets. Media narratives can subtly drive markets, reinforcing the idea that feeling unsafe means spending more. That is why conflict coverage is not neutral economics; it is a form of market sentiment.

The Hidden Costs

Military spending equals opportunity cost. Each year, the average American taxpayer pays $2,800 toward defense, money that could fund affordable housing, renewable energy, or student debt relief. The system does not need a conspiracy to keep going. It only needs to keep rewarding tension. When profit rises with instability, stability becomes bad for business. That is the central paradox of modern geopolitics. No CEO or general may wish for war, yet the system is built so that peace reduces profit.

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