Executive Mosaic’s GovCon Index declined 2.31% to $5,356.79, ending October with its most significant one-day loss. The index tracking the performance of stocks in the government contracting sector, also registered a 0.25% month-on-month loss. Wall Street’s top three indexes tumbled due to a broad selloff.
The Nasdaq Composite sank 2.76% following the rout of tech stocks. Microsoft (Nasdaq: MSFT) and Facebook parent Meta Platforms (Nasdaq: META) led decliners with -6.05% and -4.09. Both tech titans reported better-than-expected quarterly results but warned against rising AI costs. The Dow Jones Industrial Average (-0.90%) and S&P 500 (-1.86%) fell sharply.
GCI’s worst day
The GovCon Index had its worst day, eclipsing the -2.10% single-day drop on Aug. 5 this year. Only four constituents, led by defense stocks L3Harris Technologies (NYSE: LHX) and Northrop Grumman (NYSE: NOC), finished in positive territory. However, it was a forgettable day for HII (NYSE: HII), the top decliner among 26 losers.
HII plunged 26.16% to $184.96 due to weak Q3 2024 earnings and lower volume at Ingalls and Newport News Shipbuilding. In the three months ending Sept. 30, 2024, sales and service revenues declined 2.4% year-over-year to $2.75 billion, while net income declined 31.8% to $101 million compared to Q3 2023.
HII president and CEO Chris Kastner said the company will optimize operations and improve cost structure and shipbuilding to stabilize performance. On Thursday, the US Navy awarded HII a $55.5 million cost-plus-fixed-fee modification to a previously awarded contract to exercise an option to support research and development of advanced submarine technologies and submarine platforms.
BofA Securities analyst Ronald Epstein upgraded L3Harris to ‘buy’ due to a promising outlook and raised the price target to $300. LHX currently trades at $247.47 per share. AI stock Palantir Technologies (NYSE: PLTR) tanked 4.88%, while four other GCI stocks plunged more than 3%.
The US Army awarded Raytheon, an RTX (NYSE: RTX) business, an $86.7 million modification to a contract for low-rate initial production of Third Generation Forward Looking Infrared B-Kits.
Market headwind/tailwind
The Dow Jones reported that the 10-year Treasury yield rose 0.484 to 4.282% in October. It was the largest one-month yield gain since April 2024. On the labor front, the weekly initial jobless claims fell 12,000 to 216,000, a five-month low. Market analysts expect last month’s unemployment rate to remain at 4.1%. The report comes out on Friday.
Market Summary
| Index | Price | Net Change | % Change |
|---|---|---|---|
| GovCon Index Daily Average | 5,356.79 | -123.89 | -2.31% |
| NASDAQ | 18,095.15 | -512.78 | -2.76% |
Top 5 GovCon Index Daily Percentage Performers
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| LHX | 247.47 | 2.06 | 0.84% |
| NOC | 509.02 | 3.68 | 0.73% |
| HON | 205.69 | 1.49 | 0.73% |
| LMT | 546.05 | 0.11 | 0.02% |
| ACN | 344.82 | -1.75 | -0.50% |
Top 5 GovCon Index Daily Net Performers
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| NOC | 509.02 | 3.68 | 0.73% |
| LHX | 247.47 | 2.06 | 0.84% |
| HON | 205.69 | 1.49 | 0.73% |
| LMT | 546.05 | 0.11 | 0.02% |
| FLR | 52.28 | -0.82 | -1.54% |
Top 5 GovCon Index Daily Percentage Decliners
| Symbol | Price | Net Change | % Change |
|---|---|---|---|
| HII | 184.96 | -65.53 | -26.16% |
| PLTR | 41.56 | -2.13 | -4.88% |
| KTOS | 22.71 | -0.88 | -3.73% |
| GD | 291.61 | -9.76 | -3.24% |
| BA | 149.31 | -4.98 | -3.23% |
