New York, January 9, 2026, 12:15 EST — Regular session
- Northrop Grumman shares rose about 4.2% in regular trading after a sharp midweek slide on policy headlines
- Trump’s order targets dividends, buybacks and executive pay tied to delivery schedules, raising new uncertainty for defense stocks
- Northrop cited fresh Navy work, while the Marine Corps tapped a Northrop-Kratos team for “loyal wingman” drones
Northrop Grumman shares rose 4.2% to $615.86 on Friday, reversing much of a steep drop earlier in the week as defense stocks swung on Washington policy signals. The stock traded between $578.00 and $618.66 and opened at $590.72, according to market data.
Investors are trying to price two things at once: a push for higher defense spending and a tougher line on how contractors return cash to shareholders. For Northrop, that mix is landing right as contract headlines roll in and earnings season gets close.
Trump signed an executive order titled “Prioritizing the Warfighter in Defense Contracting” that ties dividends, stock buybacks — when companies repurchase shares — and executive pay to weapons-delivery schedules, three sources said. The order gives the Secretary of War 30 days to identify contractors that fall short and 15 days for board-approved remediation plans; Morgan Stanley analyst Kristine Liwag called the budget-plus-restrictions mix “carrots and sticks.” White House spokeswoman Anna Kelly said it meant “the days of defense contractors prioritizing investor returns over military readiness are over.” (Reuters)
Defense stocks have seesawed since Trump also pushed for a bigger military budget. Northrop jumped 8.3% in early trading on Thursday after the spending pitch, and “Geopolitics is the inescapable story of 2026 thus far,” Neil Wilson, UK investor strategist at Saxo Bank, said. (Reuters)
Two days earlier, Northrop slid 5.5% in afternoon trading after Trump blasted major contractors on Truth Social and threatened to block dividends and buybacks until arms production sped up. Lockheed Martin fell 4.8% and General Dynamics lost 3.6% in the same move. (Reuters)
Northrop also pointed to fresh work: a $94.3 million U.S. Navy contract to develop and qualify a new 21-inch second-stage solid rocket motor for extended-range missile programs. The job includes producing 60 units for testing and low-rate initial production at the company’s Propulsion Innovation Center in Elkton, Maryland, it said. (Design and Development Today)
The Marine Corps selected a Northrop-led team with Kratos to build its first batch of “loyal wingman” drones under a $231.5 million other transaction agreement, a flexible contracting vehicle often used to speed prototypes, DefenseScoop reported. “This enhanced capability set ensures optimal performance for both crewed and uncrewed platforms,” said Krys Moen, a Northrop vice president. Kratos’ Steve Fendley said the pairing delivers a high-capability CCA “at a price point that enables” the systems to be deployed in mass with crewed aircraft. (DefenseScoop)
On the Street, Truist Securities downgraded Northrop to “Hold” from “Buy” and cut its price target to $623 from $688, according to an MT Newswires report. The call landed as the stock bounced with the sector despite the added policy uncertainty. (MarketScreener)
But the payout question is not abstract: Northrop paid about $964 million in dividends through the third quarter of 2025 and bought back $1.17 billion of stock through Sept. 30, with $2.99 billion still authorised for repurchases, Reuters calculations based on company reports showed. If the order bites, investors could see slower cash returns even as contracts keep flowing. (Reuters)
Next up is earnings: Northrop is due to report fourth-quarter and full-year results on Jan. 27 before the market opens, followed by a webcast call at 9:30 a.m. ET. Traders will listen for any change in guidance on cash generation and capital returns, and for management’s read on schedule pressure under the new White House policy. (Stocktitan)
