Defense Stocks Fall on 2027 Budget Uncertainty

Rep. Thomas Massie filed eight privileged articles of impeachment against Defense Secretary Pete Hegseth, prompting a rapid House response over his handling of the Iran war and other military actions. A House vote could advance impeachment, but removing Hegseth would require a Senate conviction by a two-thirds majority, making removal unlikely. The articles argue that the impeachment fight itself is unlikely to materially affect defense contractors, whose revenues depend more directly on congressional appropriations and funded contracts. The larger concern for defense stocks is the prospect of a smaller fiscal 2027 defense budget than President Trump’s $1.5 trillion request, alongside uncertainty over congressional funding for the Iran war. The sources attribute the sector’s recent volatility primarily to budget expectations and the midterm election results, while noting that the funding fight—not the secretary’s fate—is the more consequential issue for investors.