Sometimes the best antidote to geopolitical anxiety is a really good earnings report. That's what happened this week with Howmet Aerospace (HWM), the aerospace supplier that posted stronger-than-expected quarterly results and raised its outlook, giving a much-needed lift to aerospace and defense ETFs that had been sweating over Iran conflict risks and oil price swings.
Howmet reported first-quarter adjusted earnings of $1.22 per share on revenue of $2.3 billion, comfortably beating Wall Street's expectations for $1.11 per share and $2.2 billion in sales. The company also bumped up its 2026 sales guidance by $550 million to about $9.7 billion and lifted its earnings forecast to roughly $4.94 per share, above what analysts were looking for.
CEO John Plant said commercial aerospace backlogs remain at record levels, and demand for engine spare parts and defense-related products is still strengthening. He acknowledged that the Iran conflict could eventually affect the sector, but the company hasn't seen any meaningful weakness in customer demand or outlook yet. For now, it's business as usual — and business is good.
Aerospace ETFs Get a Lift
The strong earnings report helped improve sentiment across aerospace and defense ETFs, which had been under pressure from Middle East tensions and fears that higher oil prices could squeeze margins. The iShares U.S. Aerospace & Defense ETF (ITA) gained alongside aerospace stocks, while the SPDR S&P Aerospace & Defense ETF (XAR) and Invesco Aerospace & Defense ETF (PPA) each advanced between 2.5% and 4.5% at Wednesday's market close. On Thursday, prices held largely flat, suggesting investors are still cautious and looking for more clues on the sector's direction.
The rally reflected relief that the Iran conflict hasn't yet disrupted aerospace fundamentals, especially for suppliers tied to commercial aircraft production and defense spending. Sometimes the market just needs a reminder that the underlying business is still humming along.
Long-Term Industry Tailwinds Remain Intact
Howmet's results also reinforced broader optimism about the aerospace supply chain. Commercial aerospace companies continue to benefit from multiyear aircraft backlogs at Boeing (BA) and Airbus SE (EADSY), while airlines globally are still investing in maintenance, replacement engine parts, and fleet modernization. Meanwhile, rising defense budgets in the U.S. and Europe continue to support military aerospace demand.
Yesterday's rally in aerospace ETFs suggests investors may be shifting focus back to the sector's long-term growth drivers after recent geopolitical concerns weighed on sentiment. But the flat movement today shows that caution hasn't fully evaporated. Investors want more evidence that the good times can roll on despite the headlines.
