While defense stocks joined in on Tuesday’s broad market sell-off sparked by a hotter-than-expected reading on inflation, that’s after several sessions of gains that came as the U.S. Senate made progress on approving a $95 billion aid package for Ukraine, Israel and other allies.
One fund focused on the defense sector — the SPDR S&P Aerospace & Defense ETF
— has been “bouncing a bit,” noted analysts at 22V Research in a recent report. They’ve previously flagged the ETF as a “sentiment indicator” for defense-related spending.
But what’s next for the aid package, given the Republican-controlled House still has to give its approval following the Democratic-run Senate’s OK early Tuesday?
Analysts at Height Capital Markets said they “expect Israel aid to pass, some Ukraine aid to pass, and some Taiwan aid to pass,” but questions remain about the timing of the House’s vote, as well as the exact levels of funding, possible conditions and potential budgetary offsets.
There are three possible scenarios for the House, according to Height analysts. The chamber could ignore the package; split it into separate measures that focus on one foreign nation at a time; or House Minority Leader Hakeem Jeffries could try to “force a floor vote on the bill through a parliamentary mechanism called a discharge petition.”
Jeffries, a New York Democrat, signaled Tuesday that he was considering that type of maneuver, as he wrote in a letter to colleagues that Democrats “will use every available legislative tool to get comprehensive national-security legislation over the finish line.”
House Speaker Mike Johnson, a Louisiana Republican, has criticized the package for lacking provisions for U.S. border security. Former President Donald Trump, the likely 2024 Republican presidential nominee, also has lobbied against the bill, saying in a social-media post that any aid to other countries should be done as a loan.
President Joe Biden on Tuesday called for Johnson to allow an immediate House vote on the $95 billion package.
“I urge Speaker Johnson to bring it to the floor immediately. Immediately. There’s no question if the Senate bill was put on the floor in the House of Representatives, it would pass,” Biden said in a brief speech at the White House. “The speaker knows that, so I call on the speaker to let the full House speak its mind and not allow a minority of the most extreme voices in the House to block this bill even from being voted on.”
Biden also criticized Trump for warning NATO allies over the weekend that he “would encourage” Russia “to do whatever the hell they want” to countries that are “delinquent” in their military spending.
“No other president in our history has ever bowed down to a Russian dictator,” Biden said. “Let me say this as clearly as I can: I never will. For God’s sake, it’s dumb, it’s shameful, it’s dangerous, it’s un-American.”
Now read: Do Trump’s NATO comments pose a risk for international stocks — and your 401(k)?
And see: Betting markets put Biden’s chance of re-election at lowest level in a year