Defense stocks rebounded sharply in overnight trading following President Donald Trump’s social media post outlining plans for a significantly increased defense budget.

Lockheed Martin stock rose 6%; Northrop Grumman, General Dynamics jumped 5%; RTX Corporation, Huntington Ingalls up 3%. The overnight rally came after these stocks plunged during the regular session when Trump threatened to prohibit dividends and stock buybacks for defense companies.

The recovery was sparked by Trump’s statement proposing a $1.5 trillion defense budget for 2027, a substantial increase from the previously discussed $1 trillion figure. In his social media post, Trump indicated the higher budget would "allow us to build the ’Dream Military’" and keep the country "SAFE and SECURE."

Trump suggested that tariff revenue would help fund the increased military spending while also enabling debt reduction and "a substantial Dividend to moderate income Patriots within our Country."

Earlier in the day, defense contractors’ shares had tumbled after Trump criticized them for issuing "massive dividends" and conducting stock buybacks "at the expense and detriment of investing in plants and equipment," declaring that such practices "will no longer be allowed or tolerated."

The rapid reversal in stock performance highlights the market’s sensitivity to policy statements from the incoming administration regarding the defense sector.