Trump sparks a surge in defense stocks by calling for $1.5 trillion in military spending

• Trump's calls for a $1.5 trillion military budget sent defense stocks soaring on Thursday.
• Northrup Grumman, Lockheed Martin, and Kratos Defense, were among the top gainers.
• The sector fell on Wednesday afterTrump said he wouldn't permit buybacks or dividends from defense firms.

President Donald Trump gave defense stocks a big boost on Thursday after he called for increasing the US military budget to a record amount.

In a post on Truth Social, Trump said he determined America's military budget should be raised to $1.5 trillion in 2027. The current defense budget is around $901 billion.

"This will allow us to build the 'Dream Military' that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe," the president wrote on Wednesday evening.

Trump added that he would have kept the military budget at around $1 trillion, but due to the "tremendous Income" generated from tariffs, the US could "easily" afford to increase that amount.

Defense stocks spiked on Thursday morning. Shares of top contractors clawed back losses from Wednesday's session spurred by Trump's statement that he would ban defense companies from issuing dividends and stock buybacks unless military production and maintenance are enhanced.

Here were the big movers Thursday morning:

• Kratos Defense: +12%
• Northrup Grumman: +8%
• Lockheed Martin: +7%
• General Dynamics: +6%
• Raytheon: +2%

The White House declined to comment further.

The strength of the US military has long been a key focus for Trump, but his attention on the US military has sharpened after the US conducted its raid on Venezuela and captured the nation's president this month. This week, Trump also revived the idea that the US could take over Greenland, with the administration weighing options including the use of the military to acquire the territory from Denmark.