Shares of major U.S. defense contractors tanked Tuesday, with Northrop Grumman (NOC) and RTX (RTX) ranking among the S&P 500’s steepest decliners after earnings reports flagged cost overruns, shrinking margins, and rising tariff exposure — even as revenue remained strong.

RTX, for its part, warned that if current trade policies remain in place, tariffs could slash its 2025 operating profit by as much as $850 million, amplifying investor concern across the sector.

Northrop Grumman dives 13%

Northrop Grumman led the sector selloff Tuesday, tumbling 13% after posting a steep 49% decline in first-quarter profit. The blow came largely from a $477 million charge tied to surging manufacturing costs on its next-generation B-21 Raider stealth bomber program.

Net income fell to $481 million, or $3.32 per share, down from $944 million, or $6.32 per share, a year earlier. Revenue slid 7% to $9.47 billion. While the company reaffirmed its full-year sales outlook, investors were clearly spooked by margin compression and trimmed earnings guidance.

RTX slides 9% on $850 million tariff threat

Shares of RTX (formerly Raytheon Technologies) dropped 9% after the company posted solid results — but delivered an unwelcome warning. First-quarter revenue rose 5% to $20.3 billion, while adjusted net income climbed to $1.99 billion, or $1.47 per share, from $1.79 billion, or $1.34 per share, a year ago.

Despite the headline beat, executives said continuing tariffs could shave more than $850 million from 2025 profit, citing exposure to metal tariffs and cross-border trade disputes. The company held its full-year guidance but acknowledged that doesn’t yet fully reflect the potential impact of trade policy uncertainty.

Lockheed up just 1% despite strong demand

Lockheed Martin (LMT) held up better, climbing 1% after reporting stronger-than-expected earnings. First-quarter revenue rose 4% to $18 billion, powered by continued demand for its missile systems and F-35 fighter jets.

Net income rose to $1.7 billion, or $7.28 per share, up from $1.5 billion, or $6.39 per share, a year earlier. Lockheed reaffirmed its full-year outlook and pointed to long-term support from rising global defense budgets.

GE Aerospace climbs 5%

In contrast, GE Aerospace (GE) rallied nearly 5% after delivering a beat. The company reported $9.94 billion in revenue and $1.49 in adjusted EPS, both ahead of analyst expectations.

CEO Larry Culp cited continued strength in maintenance demand as airlines keep older aircraft in service amid persistent Boeing and Airbus delivery delays.

How defense sector strain shows up in the S&P

Despite a broader market rebound Tuesday, the sharp declines in Northrop and RTX highlight how rising program costs and trade pressures are weighing even on the sector’s biggest names.

Most major defense players have now reported, but CTS Corporation (CTS), a manufacturer of aerospace sensors and electronic components, is slated to post results on April 30.

Within the S&P 500, defense stocks fall under the broader industrials sector, which makes up roughly 16% of the index. While companies such as RTX and Lockheed are high-profile names, the aerospace and defense subgroup represents only a small slice of the overall market.

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