Was sequestration good for government contractors?
So far, the stock prices say so.
The Hill reports that some of the largest government contractors have seen an uptick in their stock prices since sequestration took place on March 1.
While the Dow Jones industrial average has risen 4.3 percent, companies like Boeing (9.6 percent), Lockheed Martin (8.3 percent), Northrop Grumman (6.1 percent) and Raytheon (6 percent) have grown at a faster clip.
“There was a great deal of fear about sequestration, and some of that is proving a bit overdone,” said Richard Aboulafia, a defense analyst at the Teal Group told The Hill. “While it’s a softer budget outlook, it’s still a very big market. It’s not as though we’re experiencing the same kind of drawdown we saw after the Cold War.”
With the Department of Defense cutting more than $40 billion from its budget over the remaining fiscal year and employees subject to furloughs, it was believed the defense industrial base would suffer as well.
While the stock prices show some relief, there is still uncertainty how sequestration will ultimately impact both the DOD and the companies that support it.