What Happened?

Shares of aerospace and defense company General Dynamics (NYSE: GD) jumped 3.1% in the afternoon session after President Trump called for a substantial increase in the U.S. military budget for 2027. 

In a social media post, Trump stated the budget should be $1.5 trillion, a significant increase from the $901 billion approved for the prior year. The proposal fueled a rally across the defense sector, as a larger military budget could lead to more government spending and contracts for contractors. Other major defense companies, including Northrop Grumman, Lockheed Martin, and RTX Corp., also experienced sharp increases in their stock prices following the announcement.

After the initial pop the shares cooled down to $354.44, up 2.5% from previous close.

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What Is The Market Telling Us

General Dynamics’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock gained 6.6% on the news that the company reported strong second-quarter financial results that surpassed Wall Street expectations. 

General Dynamics announced second-quarter revenue of $13.04 billion, an increase of 8.9% from the year-ago period, which topped analysts' forecasts. The company also reported diluted earnings per share of $3.74, a 14.7% jump from the prior year and ahead of the consensus estimate of $3.59 per share. The strong performance was driven by growth across its business segments, with particularly robust order activity in its Marine and Aerospace divisions. The company's consolidated book-to-bill ratio, a key indicator of future demand calculated by dividing orders by revenue, was a very strong 2.2-to-1 for the quarter. This robust order intake helped push the company's total backlog to $103.7 billion, signaling a healthy pipeline of future business.

General Dynamics is up 3.2% since the beginning of the year, and at $354.44 per share, it is trading close to its 52-week high of $360.71 from January 2026. Investors who bought $1,000 worth of General Dynamics’s shares 5 years ago would now be looking at an investment worth $2,351.

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