Defense stocks clocked moderate gains early Monday, after the U.S. joined Israel's war against Iran. The United States bombed multiple Iranian nuclear facilities on Saturday under orders of President Donald Trump as part of a mission called "Operation Midnight Hammer." The mission was an effort to hobble what President Trump and Prime Minister Benjamin Netanyahu claim were near-imminent nuclear weapons capabilities. Iran vowed to retaliate, singling out U.S. citizens and military personnel as targets, while Israel continued striking various sites in Iran into Monday.
Meanwhile, NATO allies plan to meet in a previously scheduled gathering beginning Tuesday. The wars in Iran, Gaza and Ukraine will be a central topic, along with Trump's demand for allied countries to increase defense spending.
Operation Midnight Hammer
The U.S. on Saturday conducted Operation Midnight Hammer, which targeted three nuclear enrichment facilities in Fordow, Natanz and Isfahan. More than 125 aircraft participated in the mission, according to Air Force General Dan Caine.
The operation included seven B-2 Spirit stealth bombers, which flew 18 hours from the U.S. to their target sites in Iran and needed to be refueled midair several times. A decoy group of B-2's was deployed to give the impression the U.S. sent the bombers to a different location.
The Northrop Grumman bombers were equipped with GBU-57 Massive Ordnance Penetrators (MOPs), which are 30,000-pound "bunker buster" bombs made by Boeing.
The group of B-2's was accompanied by fourth- and fifth-generation fighter aircraft, as well as an array of various intelligence, surveillance and reconnaissance aircraft. The Department of Defense did not identify which jets accompanied the B-2s.
The B-2s struck Fordo first, and deployed a total of 14 of the MOP bombs across the three sites. It was the first operational use of the GBU-57 MOP, General Caine said in a DOD release.
A Navy submarine in the Arabian Sea fired "more than two dozen" Raytheon-made Tomahawk land attack cruise missiles against infrastructure targets in Isfahan following the B-2 strikes.
The U.S. used about 75 precision-guided weapons during the operation, according to the DOD.
NATO Summit
NATO leaders meet on Tuesday and Wednesday this week in The Hague, Netherlands. The U.S. joining Israel's war on Iran will be top of mind, as well as developments between Russia and Ukraine.
A central issue will be Trump's demand that NATO members all increase defense spending commitments to 5% of their country's GDP. NATO members on Sunday largely agreed to the demand, noting they need to counter a growing threat from Russia, Reuters reported. Spain declined to meet the 5% target, saying it only needs to spend 2.1% of GDP to comply with NATO's core military requirements.
Trump plans to speak to the group on Wednesday.
Decisions to hike defense spending could potentially influence defense stocks, particularly European-based names like Airbus, BAE Systems and Rheinmetall.
Defense Stocks
U.S. defense stocks were mixed early Monday, ranging from slight gains to declines.
Northrop Grumman shares rose about 0.8% Monday morning, set to add to its 6% gain this year.
RTX shares were effectively flat, poised to advance further from a buy zone. RTX stock is up almost 27% in 2025.
Boeing stock was also flat Monday, with shares up 12% this year through Friday.
Lockheed Martin rose 0.6% Monday. LMT stock is down 3.2% in 2025.
A group of smaller defense names were active, with Kratos Defense up nearly 5%, and Israel-based Tat Technologies ahead 3.5% in early trade.
Rheinmetall fell more than 4% in Europe's after hours trade. BAE Systems fell 2.5%. Airbus ticked down about 1%.
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