U.S. tech titans are beating the defense sector amid an escalating geopolitical situation—a rare phenomenon in the markets.
Since the Iran conflict began on Feb. 28, the iShares U.S. Aerospace & Defense ETF (BATS:ITA), the fund used as a proxy for tracking the defense sector, has lost about 8.7%. Meanwhile, shares of Nvidia Corp (NASDAQ:NVDA) have lost just 1.3%, and those of Apple Inc (NASDAQ:AAPL) have slipped about 4.3%.
This phenomenon represents a significant deviation from the past, when the defense sector tended to rally amid heightened global tensions. The basic rationale was that tensions would boost military spending.
Flipping The Traditional Playbook
Technology stocks were thought to be the sector most vulnerable amid escalating tensions. Rising inflation and interest-rate uncertainty, often triggered by conflict-driven energy shocks, tend to pressure high-growth sectors. Yet, this time, Big Tech has proven more resilient than expected.
U.S. tech stocks have re-emerged as …
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