Defense primes Lockheed Martin and RTX dropped 3% on Tuesday as a potential diplomatic thaw in the Strait of Hormuz prompted investors to unwind geopolitical risk premiums across the sector.
Lockheed Martin dropped 3% and is down 7% over the past month, extending a de-rating as the Hormuz reopening report compresses the defense risk premium.
RTX fell 3% and has shed 10% over the past month, with the Hormuz headline acting as an accelerant to an ongoing de-rating in defense primes.
WTI crude oil fell 0.79% to $91.64 per barrel, sliding for a fourth session as the Hormuz reopening report compresses the geopolitical risk premium.
The iShares U.S. Aerospace & Defense ETF fell 1% to $213.40, pulling the sector benchmark lower as defense primes sold off.
Boeing dipped 1%, tracking the group only loosely because its revenue mix leans toward commercial aircraft rather than munitions.
The SPDR S&P 500 ETF Trust was practically unchanged at $773.53, confirming the selling is concentrated in defense primes rather than the broader market.
Lockheed Martin and RTX shares fell 3% Tuesday following reports that Iran may reopen the Strait of Hormuz. The diplomatic signal triggered a broader de-rating in the defense sector, as markets move to price out the geopolitical risk premium that previously bolstered munitions demand.
While order backlogs remain intact, the market is repricing the 'geopolitical risk premium' that previously supported elevated valuations for munitions-heavy companies like Lockheed Martin and RTX.