As talk of Syria heated up, Raytheon shares hit an intraday 52-week high of $77.93 two weeks ago, on Aug. 26.
Then shares fell. As of midday Monday, the stock is down nearly 3 percent from its high, though it is having its first up day in three sessions.
Meanwhile, as Raytheon began losing altitude, the S&P 500 gained a little more than half a percentage point. Moreover, defense industry peers like Boeing, Honeywell, United Technologies, Textron and General Dynamics have outperformed the broader market, while Lockheed Martin stayed flat, and Northrop Grumman declined only slightly.
"I think it's within the randomness of the market," said Howard Rubel at Jefferies, who has a buy rating on Raytheon because of its potential international growth. A Syrian strike is already partially priced into defense stocks, he said.
Looking at the big picture, however, talk of an attack highlights the contradiction between what the Obama administration wants to do militarily and what sequestration has done to the defense budget, Rubel said.
"Maybe it will bring to a head some of the issues associated with the budget," he said.
So far, however, sequestration has not had much effect on defense earnings.
"The Pentagon has found a lot of the loose change in the change jar," Rubel said. "Fiscal year 2014 is going to be a little tougher."