Defense Companies Rebound

Defense companies, which have suffered mightily on the stock markets of late, took a sharp upturn, led by General Dynamics Corp., which posted strong earnings last Wednesday and was upgraded by brokerage SG Cowen Thursday. Shares of General Dynamics, builder of the Seawolf submarine and M-1 tank, as well as Gulfstream corporate jets, gained as much as 5-1/8 in morning trading on the New York Stock Exchange, before settling back to 55-3/4, up 3-3/4. Exchange. A spate of aerospace- and defense-related companies posted earnings that mostly beat Wall Street expectations Wednesday, including commercial aircraft and defense giant Boeing Co. and United Technologies Corp., which makes engines and helicopters, but also elevators and air conditioning systems. Shares of Raytheon, which reported earnings Wednesday that met lowered expectations amid the sale of a money-losing unit, gained 1-1/8, to 20-13/16. Lockheed, which has restructured, cut costs and put units up for sale as it strives to return to earnings growth, gained 1-1/8 to 22. Morgan Stanley Dean Witter analysts Heidi Wood raised her rating on Boeing Thursday to strong buy from outperform, citing a possible upturn in deliveries, rising cash flow, and better-than-expected earnings. Boeing shares gained 1-9/16, to 38-3/4. Shares of Northrop Grumman Corp., which like Lockheed is set to report earnings next week, gained 2-1/4, to 66-1/8. Litton Industries gained 3/4, to 41-3/16, and Newport News, another combat-ship maker, gained 3/4, to 31-3/16.