Defense Stocks Enter Bear Market, Hit Longest Losing Streak on Record
Key takeaways
- Defense ETFs are in a historic bear market, with XAR down 19.3% over six weeks, driven by budget uncertainty and a disconnect from the broader market.
- XAR fell 19.3% over six completed weeks
- XAR closed at $296.73 on Aug. 14
- XAR is now down 2.9% year‑to‑date
What happened
The State Street SPDR S&P Aerospace & Defense ETF (XAR) has fallen for seven straight weeks, the longest losing streak in its history, after a 23% year‑to‑date gain that has been wiped out. The fund slid 20% from its August 14 peak of $296.73, putting it in a bear‑market territory. Similar declines are seen in the iShares U.S. Aerospace & Defense ETF (ITA) and Invesco Aerospace & Defense ETF, which have lost 17.4% and 15.6% respectively since mid‑August.
Why it matters
Defense stocks are usually a safe haven during geopolitical tensions, but the current sell‑off signals a shift in investor sentiment and potential funding uncertainty. The sector’s 19.3% decline over six weeks contrasts sharply with the S&P 500’s modest 1.4% drop, highlighting a disconnect that could affect defense…
Short-term and longer-term
Short-term. Short‑term traders should watch XAR’s weekly performance and the timing of any budget resolution.
Longer-term. Long‑term investors should assess whether the current sell‑off reflects a structural shift in defense spending or a temporary budget hiccup.