US stocks opened flat on Thursday, with major indexes falling slightly in early trade amid continued geopolitical concerns, while a defense sector surge gave substantial upside beneath the surface following President Donald Trump’s proposal for dramatically increased military spending.
The S&P 500 fell 0.1% shortly after the opening bell, following its first fall in four days earlier this week, although it remained close to recent all-time highs. The Dow Jones Industrial Average dropped 51 points, or 0.1%, while the Nasdaq composite slid 0.3%. Following mixed economic statistics from the United States, bond yields climbed higher.
Defense Sector Surge Drives Gains for Military Contractors
Defense companies led the market’s notable performers after Trump proposed expanding the US military budget to $1.5 trillion in 2027, a roughly 67% increase from the $901 billion set aside for 2026, citing “troubled and dangerous times.”
RTX shares surged as much as 4.8% in premarket and early trading, while Northrop Grumman and General Dynamics rose 8.5% and 6.2%, respectively. These increases came amid general market caution, highlighting investor interest on defense in the aftermath of recent US military activities, such as the capture of Venezuelan President Nicolás Maduro and ongoing operations in the Caribbean.
Trump’s statements came after the recent U.S. military operation that seized Maduro, who is now facing drug trafficking charges in the United States, and as soldiers continue to strengthen their presence in the region. The president has also mentioned possible moves using Greenland for national security and openness to operations in Colombia.
Broader Market and Global Context
Futures had pointed lower pre-bell, with S&P 500 futures down 0.2%, Dow futures off 0.4%, and Nasdaq futures declining 0.3%, as early-year optimism faded.
Oil prices rose after U.S. forces seized two oil tankers linked to Venezuela, part of efforts to assert control over Venezuelan resources. Trump has stated Venezuela would provide 30 million to 50 million barrels of oil to the U.S. Benchmark U.S. crude increased 85 cents to $56.85 per barrel, while Brent crude rose 85 cents to $60.81.
In corporate news, Angi’s shares jumped roughly 3% as the company announced layoffs of approximately 12% of its workers, owing in part to artificial intelligence efficiency.
Global markets were mainly down: Britain’s FTSE 100 down 0.3%, Paris’ CAC 40 declined 0.2%, and Germany’s DAX fell 0.1%. Tokyo’s Nikkei 225 fell 1.6%, Hong Kong’s Hang Seng down 1.2%, and Australia’s S&P/ASX 200 rose 0.3%.
Investors are looking for additional economic clues from Thursday’s weekly layoffs report in the United States and Friday’s December jobs data.
Geopolitical Risks Keep Defense Sector in Focus
In summary, while US stocks wavered in early trade due to mixed economic indications and cautious investor sentiment, the defense sector surge indicated where market confidence now stands. Rising geopolitical tensions and concerns about greater military spending have focused attention on defense-related stocks, portraying them as a potential safe or strategic investment. This spike shows that, even as broader market indexes are under pressure from factors such as interest rates, inflation, and global growth, the defense industry may remain relatively stable. If geopolitical risks remain or defense budgets increase more, the defense industry rise could continue restoring investor confidence in an otherwise unpredictable market scenario.
