Executive Mosaic’s GovCon Index rose 0.27% to $5,507.32, a higher gain from Monday. The Nasdaq Composite (+0.78%) closed at a record high, and the S&P 500 (+0.16%) finished with gains. However, the blue-chip Dow Jones Industrial Average (-0.36%) fell into negative territory.
Breakout Stocks on GovCon Index
Decliners edged gainers on the GovCon Index, but two stocks had a breakout day. Leidos Holdings (NYSE: LDOS) led 14 advancers with +9.50%, while Tetra Tech (Nasdaq: TTEK) popped 4.16%. RTX (NYSE: RTX) and ICF (Nasdaq: ICFI) topped 16 underperformers, falling more than 2%.
Robust defense demand was why Leidos soared Tuesday. In the three months ending Sept. 27, the technology and engineering services provider reported a 7% year-over-year increase in revenue to $4.2 billion. Net income reached $362 million compared to the $396 million net loss in Q3 2023.
Leidos CEO Tom Bell said operating performance has improved across all segments. “With a healthy balance sheet, improving business development performance, and emerging ‘North Star’ strategy, Leidos is well-positioned to deliver robust and sustainable returns as we move forward,” Bell added.
Meanwhile, Tetra Tech was selected and awarded by the U.S. Agency for International Development a $5 billion, multiple-award indefinite delivery, indefinite quantity contract to support global democracy initiatives. According to the high-end consulting and engineering services firm, the contract term is 10 years.
Navy contracts
The U.S. Navy awarded Northrop Grumman’s (NYSE: NOC) Defense Systems a $167.9 million modification to a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. This award is in support of the Joint Direct Attack Mission family of weapons for the Navy, Air Force, and Foreign Military Sales customers.
Also, on Tuesday, the Navy awarded Raytheon, an RTX business, a $118.4 million firm-fixed-price modification to a previously awarded contract for fiscal 2025 Navy procurements for Rolling Airframe Missile Block 2/2A/2B Guided Missile Round Pack, spare replacement components, and recertification.
Rate forecast
The Federal Open Market Committee will have its seventh meeting this year next week, and the US Federal Reserve will likely lower its benchmark interest rate further on Nov. 7. Market analysts expect a 25-basis points rate cut and zero chance for a 0.5% reduction like in September.
