# Citi Says Aerospace, Defense Stocks Near Tactical Bottom After 20% Slide

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/28463
Published: 2026-10-08T19:41:36.000Z
Updated: 2026-10-08T19:41:36.000Z
Section: Investing

> John Godyn said Citi favors selective buying as the sector approaches bear-market territory and faces a volatile third-quarter 2026 earnings season.

U.S. aerospace and defense stocks are nearing a major tactical bottom after a roughly 20% decline from their summer peak, according to Citi aerospace and defense analyst John Godyn.

The S&P 500 Aerospace & Defense index is approaching bear-market territory as the implied probability of Democratic control of the Senate rises above 64%, adding uncertainty around future military spending.

Godyn said Citi favored selective buying after the sector’s sharp pullback. In a Wednesday note, he said aerospace and defense stocks had both experienced significant declines and that third-quarter 2026 earnings could bring volatility.

Citi opened positive catalyst watches on RTX and HII. Godyn also said the firm favored small- and midcap defense companies linked to long-term growth trends through the third-quarter earnings season.

The defense outlook remains strong, Godyn said, even as lawmakers continue debating funding. He added that the proposed military-spending pipeline is expanding while political uncertainty persists.

Citi surveyed 100 suppliers to validate company commentary and strengthen its view of the sector. HWM remained the firm’s top pick among companies with strong exposure to original-equipment demand, with a positive catalyst watch already in place.

The next test will come as aerospace and defense companies release third-quarter results. Investors will assess whether defense-funding concerns and the sector’s recent selloff are reflected in current expectations.