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U.S. defense stocks fell sharply following the Democrats' congressional victory, raising concerns about potential cuts to military spending plans. Major companies like Lockheed Martin and RTX saw significant declines in their stock prices. Analysts suggest that the new Democratic majority may impose stricter controls on Pentagon expenditures, potentially aligning the defense budget closer to the House proposal of $1.150 trillion rather than Trump's request of $1.500 trillion. Despite recent strong quarterly results, investor skepticism about large military spending increases has grown, leading to a decline in sector stocks.
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