Shares of major U.S. defense contractors climbed in Friday's session, providing a lift to the broader aerospace and military sector ahead of a long market weekend. The positive momentum was driven by a combination of geopolitical developments and ongoing budget discussions, setting the stage for potential volatility when trading resumes.
Defense Leaders Post Gains
Huntington Ingalls Industries, the prominent military shipbuilder, saw its stock price increase by 3%, closing at $418.78. Lockheed Martin, a cornerstone of the defense industrial base, advanced 2.4% to finish at $652.58. The rally extended across other major primes. General Dynamics added 2%, settling at $347.64, while L3Harris Technologies gained 1.7% to $345.50. Northrop Grumman registered a more modest 1.1% increase.
Not all components moved higher, however. RTX, formerly Raytheon Technologies, dipped 0.5%. Boeing, amid its ongoing commercial and defense challenges, managed a 1.5% gain. Among smaller, more specialized firms, AeroVironment surged 3.8%, and Kratos Defense & Security Solutions rose 2.3%. Data analytics firm Palantir Technologies advanced 1.8%.
Space Sector Focus: AST SpaceMobile's Financing Move
Activity within the space segment was highlighted by AST SpaceMobile, which edged up 0.4% to $82.51. The company dominated sector discourse after unveiling a significant refinancing strategy. AST plans to issue approximately $1 billion in new convertible notes due in 2036. Concurrently, it intends to repurchase about $300 million of its existing convertible notes maturing in 2032.
The company warned that these instruments, which are convertible into equity, could lead to substantial trading volatility due to related hedging activity by note holders. While the refinancing is projected to reduce annual interest expenses by over $50 million, it is also expected to result in the issuance of roughly 1.15 million new shares, presenting a potential dilution concern for current shareholders.
Other space-related stocks showed mixed performance. Redwire Corporation declined 2.3% to $20.09, and satellite communications provider Iridium slipped 0.8% to $19.52.
Geopolitical and Policy Backdrop
Investors were evaluating signals from the Munich Security Conference, where European leaders emphasized a push for increased defense self-reliance. European Commission President Ursula von der Leyen stated that certain geopolitical lines "have been crossed that cannot be uncrossed anymore," referencing a nearly 80% rise in European defense spending since prior to Russia's invasion of Ukraine. NATO members have committed to raising core defense spending to 3.5% of GDP, with an additional 1.5% for broader security investments.
Von der Leyen further urged the European Union to activate its mutual defense clause, framing collective security as a fundamental obligation. These discussions occur against a backdrop of U.S. political developments that have prompted allies to reassess their strategic dependencies.
U.S. Policy Pressures and Capital Allocation
Domestically, defense contractors are navigating increased pressure from the White House to accelerate weapons deliveries and expand production capacity. Analysts note that this "carrot-and-stick" approach appears effective, with major primes planning to increase capital expenditures in 2026 in direct response to administrative demands.
However, new restrictions accompanying this push are causing investor unease. An executive order prohibits contractors from paying dividends or conducting share buybacks until projects are completed on time and within budget, and it potentially imposes caps on executive compensation. David Sowerby of Ancora Advisors, which holds General Dynamics stock, criticized this as "micromanaging of capital allocation" that threatens the reliable income profile historically associated with the defense sector.
Market Context and Forward Calendar
U.S. financial markets are closed on Monday, February 16, 2026, in observance of Presidents Day. Trading will resume on Tuesday, February 17, leaving investors to digest any weekend developments at that time. Attention will remain on policy signals from Washington and Munich that could influence defense spending forecasts and contractor oversight.
In the commercial space arena, competitive dynamics continue to evolve. Vietnam recently granted SpaceX licenses to deploy its Starlink satellite internet service nationally, covering both fixed and mobile operations with approved radio frequencies. Meanwhile, AST SpaceMobile is preparing for the launch of its BlueBird 7 satellite aboard Blue Origin's New Glenn rocket in late February, a near-term milestone closely watched by the investment community.
