Most major US markets closed lower even after regaining some of the initial losses that followed Russia’s Ukrainian invasion but defense contractors gained significantly as ghoulish investors hope to profit from death and destruction.
While the US Dow Jones Industrial Average has lost close to seven percent of its value in February, stocks in corporations that supply the military with weapons and other contracted items have witnessed sharp increases.
Raytheon Technologies Corporation is a multinational aerospace, intelligence services provider, and defense manufacturing conglomerate that is one of the largest military contractors in the world. Raytheon stock prices are up more than 11 percent since Russia launched the largest ground war in Europe since the Second World War.
Northrop Grumman Corporation is another it is one of the world’s largest multinational weapons manufacturers and since the deadly conflict erupted, prices for stock in the military technology aerospace, and defense technology company have increased close to 20 percent.
Lockheed Martin Corporation is an American aerospace, arms, defense, information security, and technology corporation with worldwide interests. Lockheed’s share prices are up more than 15 percent since the killing began.
A Northrop Grumman spin-off, Huntington Ingalls Industries, saw share prices rise over seven percent.
Volatility continued to rage on Wall Street Tuesday, with the broader stock market plunging 1.77 percent while investors monitored the cascading effects of sweeping international government sanctions and Russia’s growing aggression in Ukraine.
Raytheon is the manufacturer of the Patriot missile defense system and of the Stinger ground-to-air missile, which Germany has pledged to supply to Ukrainian forces.
Lockheed Martin makes the F-35 fighter jet, Northrop Grumman is a leading manufacturer of attack and surveillance drones, and Huntington Ingalls Industries is the largest American military shipbuilder.
In September last year, the Congressional Research Service estimated that in 2020, the spending for contractors of all kinds had grown to $420 billion, or well over half of the total Pentagon budget.
Oil prices also exploded, shooting past $105 per barrel as investors anticipate disruptions in energy markets, which are likely to ripple through the global economy.
On Monday, the U.S. government and its European allies introduced sweeping penalties that banned all people in those jurisdictions from trading with Russia’s central bank, Finance Ministry and its sovereign wealth fund.
Officials have also moved to cut off the invader’s banks from SWIFT, a global money transfer service, and launched a crackdown on oligarchs to prevent them from bailing out Russia’s struggling economy.
Brazil, Syria, China, and Venezuela are among the nations that may continue doing business with Russia despite that country’s aggression but world trade is likely to suffer as perhaps as many as 40 others unite to punish Russia, including the 27 European Union member states, the United States, Britain, and Japan.
The EU countries are Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
Even Switzerland suspended its centuries-old policy of neutrality and isolation to join the EU by closing its airspace to Russian flights and imposing sanctions on Russian President Vladimir Putin and other officials.
Ukraine has requested that the European Union impose an embargo on Russian oil and gas imports, but so far sanctions have not targeted the top energy sector businesses, Gazprom, Rosneft, or Lukoil.