Several U.S. defense companies moved lower in premarket trading on Wednesday after the ceasefire agreement between the United States and Iran, while a media report indicated the Pentagon may seek substantially less war funding than previously planned.
According to The Washington Post, citing U.S. officials and people familiar with the discussions, the administration is preparing to reduce its request for additional war-related funding, with the expected amount ranging between $80 billion and $100 billion.
That figure would represent less than half of the more than $200 billion the Pentagon had originally proposed to the White House last month.
Shares of major defense contractors Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) declined about 1.3% and 1%, respectively, by 07:40 ET. L3Harris Technologies (NYSE:LHX) also traded slightly lower.
President Donald Trump said late Tuesday that he had agreed to pause planned military strikes on Iranian infrastructure for two weeks, provided Tehran immediately reopens the Strait of Hormuz.
The announcement came less than two hours before Trump’s own deadline and marked a sharp shift from his earlier warning that he could eliminate “a whole civilization” if Iran refused to reopen the strategic waterway, which carries roughly one-fifth of the world’s oil shipments.
Trump, who had issued multiple warnings in recent weeks before stepping back, said progress in diplomatic discussions led him to accept the pause. Iran had submitted a 10-point proposal that he described as a “workable basis” for negotiations, and he indicated that a final agreement could be reached within the two-week timeframe.
Iranian Foreign Minister Abbas Araghchi, speaking on behalf of the country’s Supreme National Security Council, said Tehran’s armed forces will “cease their defensive operations.”
The easing of tensions pushed oil prices sharply lower, with crude falling nearly 14%, while global equities rallied. U.S. stock futures gained more than 2%, and markets across Asia and Europe also advanced.
In addition to defense contractors, U.S. energy companies also moved lower as crude prices dropped.