On October 7th, 2023, a Muslim militant group called “Hamas” attacked Israeli towns in a surprise attack, taking more than 200 hostages. The nation of Israel, America’s closest ally in the Middle East, responded to the attack by starting its own ground assault on the Gaza Strip.
In a conflict like this, thousands can die, and millions can get displaced and kicked out of their own homes without a place to live. Hardly any business benefits from regional conflicts where cities are bombed to ruin, unless you are the weapons manufacturer.
Israel Defense Forces Infantry, cavalry scout
Right after Israel’s assault on Gaza started, the stock of Lockheed Martin, Raytheon, and Northrop Grumman surged to its highest in years, with the overall U.S. Aerospace & Defense exchange-traded fund (ETF) going up by 4%, showing a quick response by investors on the stock market.
Unlike the Russia-Ukraine War, Israel has been directly receiving U.S. military aid for around 75 years. As a closer ally to the United States, their conflict resulted in defense stocks reaching as high or even higher than they did right after the Russian invasion of Ukraine.
Now, under U.S. President Joe Biden, the United States has confirmed its bipartisan stance in support of Israel. The new speaker of the House, Republican Mike Johnson, passed a resolution supporting Israel, while President Biden has requested at least a new 14.3 billion-dollar military aid package for Israel. This expansion of military aid is on top of the 3 billion dollars that have already been sent to Israel this year.
Data showing U.S. aid to Israel, excluding missile spending and adjusted to 2022 dollars
This current military aid packet will be spent on replenishing Israel’s “Iron Dome” maintained by the Israeli defense company Rafael; more artillery shells for Israel made by General Dynamics; anti-armor precision missiles, F-16 and F-35 fighter jets, by Lockheed Martin; armored personal carriers by Oshkosh; and many more companies.
As the international community calls for a ceasefire, analysts are optimistic about the long run of the U.S. military-industrial complex. From Ukraine to the Middle East, rising political tension has made people in the military industry predict long-term revenue increases as the U.S. passes larger spending bills to outcompete China and greater military aid packages to America’s allies.
In times of war, there’s always lots of destruction, a lot of death, and a lot of sadness. Soldiers fighting at the helm of political leaders who care more about their power than themselves and their families were put on the front lines because their leaders couldn’t come to an agreement. However chaotic an event might be, capitalism allows companies and the investors in companies to always make a profit, no matter what.