Defense stocks surged sharply on February 28, 2026, after the Pentagon launched Operation Epic Fury, a joint U.S.-Israeli military strike campaign targeting Iran’s military infrastructure, nuclear facilities, and leadership. Lockheed Martin jumped roughly 14.9 percent in the days surrounding the operation, Northrop Grumman climbed about 10.9 percent, and RTX (formerly Raytheon) finished the Friday session at $202.62, up 2.52 percent. The rallies were driven by what analysts described as a shift from “readiness play” to “active consumption play,” meaning the market was no longer just betting on preparedness — it was pricing in actual munitions expenditure. The broader market told a different story.
The Dow Jones fell approximately 1.05 to 1.3 percent, the S&P 500 slipped around 0.4 percent, and the Nasdaq dropped roughly 0.92 to 1 percent on February 28. Brent crude rose 2.9 percent to $72.87 per barrel, gold surged to $5,299 per ounce by March 1, and silver pushed above $90 per ounce. The divergence between defense sector gains and broad market losses reflects a classic risk-off pattern with a military-industrial exception. This article breaks down which defense contractors benefited most and why, what the broader market reaction signals about investor sentiment, the oil and commodity risks tied to Iran’s role in global energy supply, and what analysts expect in the weeks ahead.
Table of Contents
- Why Did Defense Stocks Jump After Operation Epic Fury Began?
- How the Broader Market Reacted — And Why Defense Was the Exception
- The Oil and Energy Risk That Could Change Everything
- Which Defense Stocks Gained Most and What That Tells You
- What Analysts Are Warning Could Go Wrong
- Gold, Silver, and the Safe Haven Trade
- What Comes Next for Markets and Defense Spending
- Conclusion
- Frequently Asked Questions
Why Did Defense Stocks Jump After Operation Epic Fury Began?
The short answer is munitions. Operation Epic Fury involved Raytheon-made Tomahawk cruise missiles, Lockheed Martin ATACMS ground-launched missiles, and Northrop Grumman B-2 stealth bombers. Each of these weapons systems costs significant money to produce, deploy, and replace. When the U.S. military expends ordnance at scale, defense contractors see a direct boost to their revenue pipeline because the Department of Defense must replenish stockpiles. That is the mechanical reason Lockheed Martin saw a 2.56 percent gain on Friday alone, with a broader surge of nearly 15 percent as the operation’s scope became clear. There is also a forward-looking component.
Analysts noted the market is now pricing in demand for both expensive stealth platforms like the B-2 and cheaper lethal drones, which have become a fixture of modern conflict. This dual demand signal is significant because it suggests sustained defense spending regardless of how the conflict evolves. If the operation scales up, more munitions get consumed. If it winds down, replenishment orders still flow. Compare this to the early days of the Ukraine conflict in 2022, when defense stocks rallied on similar logic but some of those gains proved temporary once the initial shock faded. The kill of Iran’s Supreme Leader Ayatollah Ali Khamenei during the strikes added an unpredictable element. Leadership decapitation raises the prospect of prolonged instability, which markets interpret as prolonged defense demand. Three U.S. service members were killed and several injured during the operation, according to Military.com, underscoring that this was not a limited, risk-free engagement.
How the Broader Market Reacted — And Why Defense Was the Exception
While defense stocks climbed, nearly every other sector retreated. The Dow’s 1.05 to 1.3 percent decline and the Nasdaq’s roughly 1 percent drop reflected investor anxiety about energy disruption, geopolitical escalation, and the uncertain trajectory of a shooting war with Iran. this is a textbook flight from risk assets, with money rotating into gold, treasuries, and — notably — the defense sector itself. However, the sell-off was not as severe as some feared. Some analysts believe the market had already partially priced in military action against Iran, given weeks of escalating rhetoric and troop movements.
The absence of an immediate, catastrophic energy shock — Iranian oil facilities were not the primary targets in the first wave — may have prevented a deeper rout. If you are an investor watching this unfold, the critical caveat is that partial pricing-in only holds if the conflict stays within the bounds the market expected. A wider regional war involving the Strait of Hormuz would be a different scenario entirely. The commodity moves were telling. Brent crude’s 2.9 percent rise to $72.87 was notable but not panicked. Gold hitting $5,299 per ounce by March 1 and silver topping $90 per ounce signaled that institutional investors were hedging aggressively, but had not yet moved to full crisis positioning. OPEC’s announcement that it would raise output by 206,000 barrels per day in April, up from 137,000 barrels per day in the fourth quarter, was a deliberate stabilization signal aimed at preventing a supply panic.
The Oil and Energy Risk That Could Change Everything
iran produces approximately 3.3 million barrels of oil per day, and the Strait of Hormuz — through which roughly 20 percent of the world’s oil passes — sits at the center of this conflict’s economic risk. Analysts warned that if Iran retaliates by disrupting shipping through the strait, oil prices could push above $80 per barrel quickly. That would ripple through every sector of the economy, from transportation to consumer goods, and could accelerate inflation at a moment when the Federal Reserve has limited room to maneuver. On the Friday of the strikes, Brent crude’s move to $72.87 was relatively contained. But this reflected only the first hours of market digestion.
CNN reported that oil traders were watching closely for any Iranian naval activity near the strait, and OilPrice.com noted that crude had already surged 3.7 percent in the days prior as the standoff intensified. The gap between the current price and the $80-plus scenario analysts flagged is not large, and it would not take much — a single attack on a tanker, a mine in the shipping lane — to close it. For consumers and businesses, the practical concern is gasoline prices. A sustained move above $80 Brent typically translates to noticeable increases at the pump within two to three weeks. If you are running a business with significant fuel or shipping costs, the next 30 days are worth watching carefully.
Which Defense Stocks Gained Most and What That Tells You
Lockheed Martin’s 14.9 percent surge made it the clear winner, driven by ATACMS missile expenditure and the company’s broad role as the largest U.S. defense contractor. Northrop Grumman’s 10.9 percent gain was tied directly to the B-2 stealth bomber’s prominent role in the operation — the B-2 is a Northrop platform, and its deployment in a high-profile combat mission validates decades of investment in stealth technology. RTX’s 2.52 percent Friday gain, finishing at $202.62, reflected Tomahawk missile demand, though RTX’s more diversified business (including commercial aerospace through its Pratt & Whitney division) diluted the pure defense play. The tradeoff for investors is between magnitude of gain and sustainability.
Lockheed and Northrop are purer defense plays, meaning they rise more sharply on military action but are also more exposed if the conflict de-escalates quickly. RTX offers more diversification but a smaller defense premium. Historically, defense stock rallies tied to specific military events tend to be front-loaded — the biggest gains come in the first few days, and then the stocks either consolidate or give back some gains depending on whether the conflict persists. The analysts who warned that these rallies are “event-dependent” and could reverse on de-escalation are worth taking seriously. If you are considering defense stocks purely as a short-term trade on the conflict, understand that you are essentially making a geopolitical bet. If you already held these stocks as part of a long-term defense allocation, the gains are a windfall that may or may not persist.
What Analysts Are Warning Could Go Wrong
CNBC flagged the week of March 2 through 6 as carrying “new risks for markets” tied directly to Operation Epic Fury. The concern is not just the immediate military action but the second-order effects: Iranian retaliation, potential disruption to global energy flows, cyberattacks on Western infrastructure, and the possibility of the conflict drawing in additional regional actors. The most important limitation to understand is that defense stock rallies during military operations are not guaranteed to hold. The initial surge reflects shock and repricing, but sustained gains require sustained conflict or, at minimum, sustained defense budget increases. If the U.S.
and Israel achieve their objectives quickly and Iran’s response is limited, the very conditions that caused the rally disappear. Investors who bought at the top of the surge could find themselves holding overvalued positions in a de-escalation scenario. There is also a macroeconomic risk. If oil prices spike and inflation re-accelerates, the Federal Reserve could be forced into a more hawkish posture, which would pressure all equities including defense stocks. A rising interest rate environment makes the present value of future defense contracts less attractive in discounted cash flow models, even if the contracts themselves are growing.
Gold, Silver, and the Safe Haven Trade
Gold’s move to $5,299 per ounce and silver’s push above $90 per ounce by March 1 were among the sharpest single-event moves in precious metals in recent memory. These prices reflect not just the Iran strikes but a broader accumulation of geopolitical risk premium that had been building for weeks. CNN had reported gold crossing the $5,000 threshold as early as mid-February, when U.S.-Iran tensions were escalating but before strikes had begun.
For anyone holding gold or silver as a portfolio hedge, the Operation Epic Fury rally validated the thesis. But buying into precious metals after a major geopolitical event is a different proposition than having owned them before. If the conflict stabilizes, gold could retrace some of its gains, and silver — which is more volatile and more tied to industrial demand — could pull back further. The safe haven trade works best as insurance purchased before the crisis, not as a momentum play during one.
What Comes Next for Markets and Defense Spending
The weeks following Operation Epic Fury will be defined by two questions: how Iran responds, and whether the U.S. and Israel pursue further strikes. CNBC’s warning about the March 2 through 6 week being a risk period reflects the reality that markets are still digesting the initial shock and have not yet priced in a full range of escalation scenarios.
OPEC’s decision to raise output by 206,000 barrels per day in April is a stabilization measure, but it only helps if the Strait of Hormuz remains open and Iranian oil infrastructure is not targeted in subsequent waves. For defense spending, the operation strengthens the case for higher budgets regardless of the conflict’s duration. Munitions stockpiles need replenishment, stealth platforms proved their value, and the political environment in Washington will favor defense hawks for the foreseeable future. Whether that translates into sustained stock gains or merely prevents a selloff depends on execution and escalation — two variables no analyst can predict with confidence.
Conclusion
Operation Epic Fury produced a sharp, immediate divergence in financial markets: defense stocks surged while the broader indices fell, commodities spiked, and safe haven assets rallied. Lockheed Martin, Northrop Grumman, and RTX were the primary beneficiaries, driven by real munitions expenditure and forward-looking demand for both advanced platforms and cheaper drone systems. The broader market’s decline was contained but fragile, with oil prices, the Strait of Hormuz, and Iranian retaliation representing the key risk factors that could deepen the sell-off. For investors, consumers, and anyone watching the economic fallout, the next 30 days matter more than the first 48 hours.
Defense stock gains could hold or reverse depending on escalation. Oil prices could spike or stabilize depending on the strait. And the Federal Reserve’s response to any inflationary pressure from energy costs could reshape the entire market landscape. The only certainty is that uncertainty itself has increased, and positioning for a single outcome — whether bullish or bearish — carries real risk.
Frequently Asked Questions
How much did Lockheed Martin stock rise after Operation Epic Fury?
Lockheed Martin surged approximately 14.9 percent overall, including a 2.56 percent gain on February 28, the day the strikes began. The gains were driven by ATACMS missile expenditure and expectations of munitions replenishment orders.
Did the overall stock market go up or down after the Iran strikes?
The broader market fell. The Dow Jones dropped approximately 1.05 to 1.3 percent, the S&P 500 slipped about 0.4 percent, and the Nasdaq declined roughly 0.92 to 1 percent on February 28, 2026. Defense stocks were the notable exception.
What happened to oil prices after Operation Epic Fury?
Brent crude rose 2.9 percent to $72.87 per barrel on February 28. Analysts warned that disruption to the Strait of Hormuz could push oil prices above $80 per barrel, given Iran’s 3.3 million barrels per day of production.
Could defense stocks give back their gains?
Yes. Analysts warned that defense stock rallies tied to specific military events are event-dependent and could reverse if the conflict de-escalates. Sustained gains typically require either prolonged conflict or increased defense budgets.
What happened to gold and silver prices?
Gold surged to $5,299 per ounce internationally by March 1, 2026, and silver pushed above $90 per ounce. Both moves reflected aggressive safe-haven positioning by institutional investors.
Is OPEC doing anything to stabilize oil prices?
OPEC announced it would raise output by 206,000 barrels per day in April, up from 137,000 barrels per day in the fourth quarter, in an effort to prevent a supply panic and stabilize prices.