Lockheed Martin stock is surging; Here’s why

The January 7 regular session and the stock market after hours leading toward January 8, were a rollercoaster ride for the U.S. defense giant Lockheed Martin (NYSE: LMT). 

Specifically, the LMT shares first fell 4.82% from approximately $525 to their latest closing price of $496.87 and then rapidly surged 6.67% to $530 in premarket. 

At press time, it appears that President Donald Trump has been the sole culprit for the LMT stock’s total 10% whipsaw.

How President Trump crashed LMT stock price

On Wednesday, January 7, President Trump issued an executive order aimed at boosting arms production in the U.S. 

Simultaneously, the text contained a threat to major American weapons manufacturers such as Raytheon (NYSE: RTX) and Lockheed Martin, as it indicated they would be forbidden from paying dividends or executing stock buybacks until the White House’s goals are met.

Both dividends and the more controversial buybacks are some of the key factors making investing in firms attractive. The former due to providing stakeholders with a predictable source of passive income, and the latter as it helps remove a vast quantity of shares from the open market, thus increasing the value of equity.

Predictably, investors started dumping the stock of firms like Lockheed as soon as the order was published, as LMT shares lost much of their appeal under the new conditions.

How President Trump helped LMT stock skyrocket

Still, the defense giants were moved in a different direction soon after, thanks to another controversial move of President Trump. Specifically, the commander-in-chief announced he would seek to increase America’s military budget to a staggering $1.5 trillion, citing ‘troubled and dangerous times.’

U.S. defense spending has been a controversial topic for decades, as it has been, over the years, increasing steadily, with the most recent approved budget amounting to $901 billion, making it one of the single biggest expenditures for the federal government.

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