U.S. Stock Futures Edge Lower as Defense Shares Rally on Trump’s $1.5 Trillion Budget Proposal
U.S. stock index futures moved cautiously lower on Thursday as investors positioned themselves ahead of Friday’s highly anticipated nonfarm payrolls report, while defense companies climbed sharply on expectations of robust government spending following President Donald Trump’s proposal for an expanded military budget for 2027.

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Futures Retreat Ahead of Key Jobs Data

U.S. stock futures were in negative territory early Thursday, reflecting investor caution as markets await Friday’s latest nonfarm payrolls data — a key economic indicator that could shape expectations for Federal Reserve policy.

• Dow E‑minis were down approximately 0.30%
• S&P 500 E‑minis slipped about 0.22%
• Nasdaq 100 E‑minis were lower by around 0.31%

These softer futures followed a mixed session on Wednesday, when the Dow Jones Industrial Average closed lower after hitting record highs earlier in the day. Despite the retreat, technology and artificial intelligence‑related stocks helped buoy the Nasdaq to its strongest level since late October.

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Defense Stocks Surge on Trump’s Budget Plans

A major market theme on Thursday was the sharp advance in defense sector equities after President Trump outlined plans for a significant increase in U.S. military spending. Trump proposed that the 2027 U.S. military budget be set at $1.5 trillion, a substantial rise from the roughly $901 billion approved for 2026.

Leading defense contractors rallied in premarket trading:

• Lockheed Martin surged over 7%
• Northrop Grumman climbed about 7.5%
• RTX gained nearly 5%
• Kratos Defense rallied more than 7%

Investors viewed the proposed increase as a potential catalyst for future revenue growth in the defense industry, given the expectation of larger government orders and sustained defense spending. Supportive sentiment was underpinned by reports that defense stocks have rebounded after initial volatility linked to Trump’s comments on dividend and buyback restrictions for contractors.

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Mixed Signals on Corporate Policy and Geopolitics

Trump also said he would block defense contractors from paying dividends or buying back shares until they accelerate weapons production and expand capacity — a move that injected uncertainty into the sector earlier in the session.

The broader geopolitical backdrop has added additional market complexity, with recent U.S. actions including the capture of Venezuelan President Nicolás Maduro and discussions about potential strategic interests in Greenland. These developments have weighed on investor sentiment and contributed to risk‑off positioning ahead of key economic data.

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Broader Equity Market Trends

Beyond the defense sector, other stocks showed mixed performance on Thursday:

• Applied Digital advanced after reporting higher‑than‑expected revenue.
• Constellation Brands climbed on stronger sales and profit figures.

However, overall market breadth was cautious as traders balanced the latest corporate earnings and macroeconomic data with geopolitical headlines and central bank expectations.

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Market Outlook: Jobs Data in Focus

With the U.S. jobs report due Friday, investors are keen for fresh insight into the labor market, which is poised to influence the Federal Reserve’s policy outlook for interest rates in 2026. Recent data has presented a mixed picture, with job openings near a 14‑month low and sluggish hiring, underscoring potential vulnerabilities in the labor market.