Executive Mosaicâs GovCon Index inched 0.09% lower at $4,947.67 (-0.09%) on Friday, a fourth daily loss in five days like the previous week. The index, which tracks the stock performances of 30 major government contractors, has lost more than 2% in two consecutive weeks and -4.95% overall in the first half of December.
The Nasdaq Composite (+0.3%), of the major US stock indexes, posted a weekly gain. The tech-heavy index hit 20,034.89 midweek, a new all-time high. Meanwhile, the blue-chip Dow Jones Industrial Average shed -1.8% and recorded a seven-day losing streak. The broad S&P 500 Index was flat before the weekend, but gained 0.6% for the week.
Heightened Downward Pressure
The GovCon Index is on track to register four consecutive monthly losses if the beating in Dec. continues. Its worst month thus far is Sept. (-3.05%), with -0.24% and -2.87% in Oct. and Nov., respectively. Only five GCI stocks had positive returns after ten days this month.
Palantir Technologies (NYSE: PLTR) outperformed with +13.40% during the period, followed by Boeingâs (NYSE: BA) +9.14%. AeroVironment (Nasdaq: AVAV) tanked -19.54% from the losing bunch. Five stocks, including CACI International (NYSE: CACI) and Booz Allen Hamilton (NYSE: BAH), plunged between 9% and 11%.
The brightest star in the government contracting sector is Palantir Technologies. At $76.07 per share, the AI stock is up +343.04 year-to-date. The software platform for data analytics benefits from the strong demand for artificial intelligence solutions. Government contracts are likewise rising. PLTR will officially join the Nasdaq 100 Index on Dec. 23.
The GovCon Index had its best months in July (+6.94%) and Aug. (+4.74%) However, things turned sour in the ensuing months. The year-to-date gain on Nov.8 was +20.82%, but is down to +5.98% as of Dec.13, 2024. There are 11 trading days left to recover and avert a full-year loss.
Likely Beneficiaries
A change in the administration in 2025 could impact the government contracting industry, more so small business government contractors. However, increased defense spending might benefit large-cap GCI stocks involved in military modernization and national security enhancement. Palantir will remain the hottest stock with the adoption of AI across the Department of Defense.
