There are just days left until sequestration hits, imposing $85 billion of cuts in federal spending, and defense stocks are up -- at least for the moment.

The group rebounded Tuesday after Monday's drubbing, even as it appears that there's no chance anyone will start to do some serious talking.The gains weren't huge, but they seem to reflect Wall Street's belief that a resolution will be found that mitigates the effects of sequestration.

Northrop Grumman (NOC) was up 28 cents to $65.03. General Dynamics (GD) gained 22 cents to $66.91. L-3 Communications (LLL) has gained 57 cents to $75.89. Boeing (BA), which generates nearly half of its revenue from military contracts, was up 62 cents to $75.65. Huntington-Ingalls Industries (HII), the largest naval shipbuilder, was up $1.28 to $45.47.

The NYSE Arca Defense Index ($DFI) is up nearly 8 points to 1,704.

The catalyst for the gains was a rebound for the stock market overall, in part because of decent reports on new-home sales and consumer confidence. The Dow Jones industrials ($INDU) jumped 127 points to 13,911, a day after losing 216 points.

Apple (AAPL) was a boost as well after hedge-fund manager Doug Cass predicted the company will announce a stock split at its annual meeting on Wednesday and possibly a special dividend. Shares struggled early in the day but jumped $6.17 to $448.97 on the Kass comments.

Defense spending would be hardest hit under the sequestration rules. Some $46 billion will be axed from defense budgets alone, and adding sequestration to existing defense cuts would result in a reduction of $50 billion in defense spending over the next 10 years.

In the near-term, the Pentagon has frozen employment and warned that it will fulfill contracts only slowly. It is also pulling aircraft carriers close to home to save money.

And despite all that, the stocks are holding up. The NYSE Defense index may be down about 1.2% on the week, but it is up 1.2% for February and 2.3% for the year. The iShares Dow Jones Aerospace & Defense (ITA) exchange-traded fund is down 2.1% from a peak in January.

These companies have their champions in Congress and in the Defense Department, and no one sees them getting seriously hurt. So the F-35 fighter jet, which is seven years behind schedule and 70% over its original cost estimate, will continue to be built at a cost of around $137-million each. The lead contractor on the plane is Lockheed Martin (LMT).

It has parts from 1,300 suppliers operating in 45 states and provides 41,000 jobs in Texas alone. But the entire fleet was grounded last week after the discovery of a cracked turbine blade in one plane.

The fighter represents about 13% of Lockheed Martin's revenue, according to Bloomberg News. Lockheed was a rare decliner on Tuesday, down 58 cents to $87.30, and its shares are down 9.1% since hitting $96.07 in January. But the stock is up some 370% since the end of 1999.

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