The iShares U.S. Aerospace & Defense ETF (NYSE:ITA) is up 33% year-to-date through July 16, on track for its best annual return since 2013.
The fund gained 25% in the first half alone, outperforming both the Vanguard S&P 500 ETF (NYSE:VOO) and the Invesco QQQ Trust (NASDAQ:QQQ) by double-digit margins.
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Washington Fueled The Rally—Now Investors Want Results
Investors have already bought the rumors—now they want the facts. The explosive rally in defense stocks has been fueled by a fundamental shift in Washington's priorities and the rising tide of global tensions.
On July 4, President Donald Trump signed the "One Big Beautiful Bill Act," a sweeping defense package that injects $156.2 billion into the Pentagon—the largest single-year boost in over a decade.
The bill directs tens of billions toward areas that could redefine the future of warfare and defense contracting. Shipbuilding alone receives $29.2 billion, while $24.4 billion is allocated to integrated air and missile defense—what the administration has dubbed the "Golden Dome" initiative.
Another $25.4 billion is earmarked to strengthen munitions production and shore up supply chain resilience, and $16 billion will go toward scaling low-cost weapons systems.
The budget also includes $10.8 billion to modernize the U.S. nuclear arsenal and $8.6 billion to support new air superiority projects.
Q2 2025 Defense Earnings Preview: Who Reports and When
Defense stocks slated to report earnings by the end of July include: ...
