Stalling Defense-Stock Rally In Search of an Earnings Catalyst

A huge rally in European defense stocks has stalled this summer, as investor optimism over expanding military budgets turns to impatience about when this will be reflected fully in company order books.

A Bloomberg index of European military shareshas declined 3.8% since hitting an intraday record in June, amid US pressureon Russia to end hostilities in Ukraine and a European Union pledge to purchase US military gear. US peers have been treading water since mid-July after uncertainty around government spending, demand and tariffs muddied sentiment.

“The problem is, markets were sort of hoping for more, sooner,” said Will ...