US Midterms Hit One Class of Stocks the Hardest as Trump Mulls Hegseth Removal

Defense stocks fell the hardest after Democrats won Congress in the US midterms, with investors selling the sector as divided government raised the prospect of tighter scrutiny over military spending. The losses came as President Trump weighed whether to remove Pete Hegseth from his Pentagon role, adding leadership uncertainty at the Department of Defense on top of the political shift. The reaction matters because defense names had been priced for sustained budget growth, and a split Congress could slow or reshape appropriations. Traders will watch Hegseth's status and early signals on the next defense budget for direction.