Sector Snap: Defense

Analysts said the election of Barack Obama as the next U.S. president was having little affect on trading Wednesday as it was widely anticipated he would win.

The Dow Jones Industrials average fell 3.2 percent to about 9,314 in midday trading.

"Obama's victory is probably no worse for the outlook for defense and could even prove to be better than the alternative," said Bank of America's Harry Nourse, in a note to clients. He added the sector would provide a "relative haven during recessionary periods" due to the lack of correlation between gross domestic product growth and defense funding.

Shares of Chicago-based Boeing dropped sharply Wednesday, tumbling $4.08, or 7.7 percent, to $49.14. However, the primary driver was the aerospace giant's announcement Tuesday it would be postponing its first test flight of its long-delayed 787 jetliner until next year.

Falls Church, Va.-based General Dynamics also fell, to $1.27, or 2 percent, to $62.50.

A separate assurance for investors, analysts noted, are plans by Obama not to cut the defense budget within his first 18 months in office.

"The Democrats are sensitive about appearing weak on defense, and we don't expect strong cuts to defense," said Morgan Stanley analyst Heidi Wood, in a client note.

Wood said based on the new administration's assessment of the current threat, that could ultimately effect whether spending will continue its upward trajectory.

Among the defense programs likely to count on continued support by the Obama administration are: Lockheed Martin Corp.'s F-35 fighter jet, the Navy's surface combatants and space unmanned systems.