January 8, 2026, 05:31 (EST) — Premarket
- Northrop Grumman shares jumped about 7% in premarket trading after a 5.5% drop in the prior session
- Trump’s executive order targets dividends, buybacks and pay at defense contractors until production speeds up
- Investors are watching for enforcement details and Northrop’s Jan. 27 results for any shift in capital-return plans
Shares of Northrop Grumman Corp (NOC.N) jumped 7.4% to $619.50 in early trading on Thursday, rebounding sharply after a 5.5% drop to $577.01 the previous day. The stock has been volatile, reacting to each fresh statement from Trump on defense budgets and contract awards. 1
The whipsaw matters because investors count on Northrop and its peers for steady cash returns. If Washington steps in to block payouts, even briefly, it shakes up how the market values the group — all while contractors face mounting pressure to speed up delivery.
On Wednesday, President Donald Trump issued an executive order barring defense contractors from paying dividends or buying back stock until they deliver a “superior product, on time and on budget.” Dividends are cash paid to shareholders, while buybacks mean a company repurchasing its own shares. The order also gives the Pentagon 30 days to pinpoint underperforming contractors and instructs the SEC to take another look at Rule 10b-18, the buyback safe-harbor rule. 2
Northrop and several other big defense contractors took a steep hit in U.S. trading on Wednesday, after Trump warned he might cap executive pay and tie bonuses directly to project delivery. Northrop is the prime contractor on the Air Force’s Sentinel intercontinental ballistic missile upgrade, a program already under the microscope for its cost overruns and tight deadlines. 3
Things took a sharp turn when Trump pushed for a $1.5 trillion U.S. military budget in 2027, a big jump from the $901 billion Congress set for 2026. Big defense stocks jumped in after-hours trading. Byron Callan, a defense analyst at Capital Alpha Partners, questioned where exactly that kind of money would go and whether the defense industry could “even be absorbed” by it. 4
Roman Schweizer, an analyst at TD Cowen, said Trump’s move “results in more questions than answers,” pointing out that investors need clearer rules and benchmarks to figure out how buybacks and dividends might be affected. He also cautioned that the policy could trigger “a host of regulatory and legal issues,” including uncertainty over who qualifies as a defense contractor. 5
A recent filing revealed Northrop CEO Kathy Warden offloaded 7,000 shares at $600 each on Jan. 5, followed by another 3,000 shares at $615 on Jan. 6. According to the document, these transactions were executed under a Rule 10b5-1 plan put in place last September — a pre-set trading strategy that lets insiders sell stock based on predetermined rules. 6
The rebound doesn’t resolve the bigger question: how strictly the administration will enforce payout limits, or whether Congress will actually back a spending boost close to Trump’s proposal. Ben Bourne, an analyst at Investec, said the order might have “significant implications” for U.S. contractors and could push investors toward UK defense stocks. 7
