Defense stocks higher even as big military budget cuts proposed

|By:, SA News Editor

The Pentagon announces plans to shrink the U.S. Army to pre-WW II levels - to fewer than 450K from the current 520K - in order to meet 2015 spending caps.

Also planned for elimination is the Air Force's fleet of A-10 Warthog close air support planes - a change some influential lawmakers are expected to oppose - to ensure continued funding of Lockheed Martin's (LMT +1.7%) new long-range F-35 bomber and a new aerial refueling tanker.

Nevertheless, top defense stocks are solidly higher, presumably because the Defense Department envisions warfare being waged using enhanced technologies: BA +1.4%, GD +1.5%, NOC +1.9%, RTN +2.2%, HII +0.9%.