Biden Says an Infrastructure Deal Has Been Reached. Here’s What It Means for Stocks.
Construction workers in Los Angeles.
VALERIE MACON/AFP via Getty Images
President Biden announced Thursday that he has come to an agreement with a group of Republican Senators on an infrastructure package of about $1 trillion.
“We had a really good meeting and to answer the direct question, we have a deal,” Mr. Biden told reporters at the White House, according to The Wall Street Journal. “We’ve all agreed that none of us got what we all would have wanted.”
Included in the deal are plans to upgrade transportation, internet, and other infrastructure.
The Dow Jones Industrial Average, up 339.40 points, or 1%, was the big winner, while the S&P 500 and Nasdaq Composite were up 0.6%.
Meanwhile, after lagging the broader market earlier in the session Thursday, industrial stocks were rallying. That S&P 500 Industrial Sector was up about 0.8% around 1:25 p.m. Thursday.
There are divergent views on which stocks and sectors would benefit from an infrastructure deal. Before Biden’s announcement, BofA’s Savita Subramanian played down the potential boost industrials could get from a deal.
“The infrastructure bill is far from a slam-dunk, traditional capex is a small part of the bill, and infrastructure beneficiaries (Machinery, Construction) are a small part of Industrials and are already expensive,” Subrmananian, head of equity and quant strategies at BofA Global Research, wrote in a Wednesday note.
She highlighted energy and real estate, not industrials, as the firm’s ” preferred routes to position for an upcycle in capex, inflation, and economic growth.”
Still, engineering firm Aecom (ticker: ACM) was up more than 3% Thursday to $63 and change, and MasTec (MTZ) was up by a similar percentage to above $106. Caterpillar (CAT) gained 3.%, while Deere (DE) rose 12.6%.
Another company that could benefit from an infrastructure plan, Martin Marietta Materials (MLM), which makes construction materials, was up 2.6%, while Vulcan Materials (VMC) jumped 3.3%
Write to Lawrence C. Strauss at [email protected]
