Why Defense Stocks Soared Through The Sequester

Despite threats of Armageddon from defense contractors and the Pentagon, sequestration hasn't slowed down the industry at all.

Major companies like General Dynamics and Lockheed initially showed losses back in February, but now that the automatic cuts kicked in on March 1, the heavy hitters have been able to soar above market averages.

From The Hill:

While the S&P is up 3.7 percent and the Dow Jones industrial average has risen 4.3 percent, Boeing has jumped 9.6 percent, Lockheed Martin is up 8.3 percent. Northrop Grumman has climbed 6.1 percent and Raytheon is up 6 percent.

Rich Smith, a contributing writer to The Motley Fool, put together a good video explaining the difference between rhetoric and reality.

"All the people who have been telling you the defense companies are toast, they're wrong," Smith says in a video posted Apr. 5. "The U.S. government is still spending like drunken sailors, soldiers, Marines, and airmen."

“There was a great deal of fear about sequestration, and some of that is proving a bit overdone,” Richard Aboulafia, a defense analyst at the Teal Group, told The Hill. “While it’s a softer budget outlook, it’s still a very big market. It’s not as though we’re experiencing the same kind of drawdown we saw after the Cold War.”