If there's one industry that looks like it might be on the chopping block after Democrats broke the GOP's 12-year stranglehold on the House, it's the defense sector.

Investors were already expecting the worst as shares of some of the nation's biggest defense contractors - General Dynamics (GD), Lockheed Martin (LMT), Northrop Grumman (NOC) and Raytheon (RTN) – were all down Wednesday, and stayed down after the surprise news that Defense Secretary Donald Rumsfeld was resigning.

Cary Leahey, an economist with Decision Economics, labeled the pullback "a knee-jerk reaction," noting he does not expect any cutbacks in defense spending in the next six to 12 months.

And even then, the cuts might not be as bad as some on Wall Street expect, as Democrats could instead redirect spending to pro-military firms that deliver services to U.S. troops.