Global defense contractors are driving a rally in industrial stocks, with Lockheed Martin and RTX raising full-year outlooks on the back of surging munitions orders. While geopolitical volatility fuels military production, the broader sector faces headwinds from high fuel costs and disappointing margins in the automotive and aviation segments.
Lockheed Martin reported second-quarter profit of $1.84 billion, or $7.94 a share, comfortably beating Factset analyst expectations of $7.19. Sales climbed 11% to $20.06 billion as the firm rapidly scaled production. Similarly, RTX lifted its annual forecast, citing double-digit growth across its commercial aerospace and defense units driven by sustained international demand.
Not every sector participant shared this momentum. Tesla earnings fell significantly below market expectations, with heavy capital spending resulting in negative cash flow despite robust revenue. Meanwhile, American Airlines warned of an impending quarterly loss, citing a sharp rise in jet fuel prices that threatens to offset revenue gains of up to 19%.
Rail operators offered a mixed look at the industrial landscape. Union Pacific exceeded Wall Street estimates with a $1.99 billion profit, or $3.36 a share, supported by a 12% revenue increase. Norfolk Southern also surpassed revenue projections at $3.5 billion, though the company continues to navigate ongoing costs related to its Ohio freight-train derailment and recent corporate restructuring efforts.
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