US Midterms Hit One Class of Stocks the Hardest as Trump Mulls Hegseth Removal

Defense stocks fell more sharply than the rest of the market on Wednesday after Democrats won both chambers of Congress, with Lockheed Martin down about 7% as investors anticipated a smaller Pentagon budget than President Donald Trump wants. Congress sets military spending, and Trump requested $1.5 trillion for 2027 while $901 billion is currently approved; Jefferies analysts expect a figure closer to the House’s roughly $1.15 trillion plan. L3Harris fell nearly 8% and RTX more than 4% in morning trading, while Lockheed later traded down 7.45% and Northrop Grumman 4.64%. Reports also said Trump has asked advisers whether Defense Secretary Pete Hegseth should stay, with no decision made and Florida Governor Ron DeSantis floated as a possible replacement.