Wall Street defense stocks fall amid bets on Democratic congressional sweep

Wall Street is reacting to expectations of a Democratic sweep of Congress by selling off aerospace and defense stocks, according to reports from aol.com and 247wallst.com. The iShares U.S. Aerospace & Defense ETF (ITA) has declined nearly 18% since August, reflecting investor concerns about future defense budgets.

The selloff has affected contractors unevenly. Northrop's stock has dropped 34% from its 52-week high, while Lockheed Martin's shares have risen 15% year to date, supported by its substantial $230 billion backlog, including a $35 billion contract for the THAAD missile defense system.

Raytheon Technologies (RTX) has seen a 6% gain year to date, as its commercial aerospace segment is less vulnerable to congressional budget decisions, cushioning it from election-driven selling pressure.

These market movements highlight which defense programs and contractors investors believe may face budget cuts or continued funding depending on the congressional outcome, as the Polymarket platform prices Democratic control of the House at 91%.

The ITA ETF closed at $207.76 on October 19, 2026, down 0.63% on the day, underscoring ongoing investor caution ahead of the elections.