Wall Street loudly cheered the Senate’s approval of President Biden’s $1-trillion infrastructure plan. The two major indices, the Dow Jones Industrial Average and the S&P 500, climbed to new record highs as the development stimulated a rally in stocks tied to economic growth. The bill will now be moved to the House of Representatives, per a Reuters article.
The Senate has passed the bipartisan infrastructure bill of $550 billion in addition to the previously-approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.
According to the White House, the proposal will allocate about $100 billion toward the development of roads, bridges and other major projects and $66 billion toward passenger and freight rail. Going on, about $15 billion will be invested toward electric vehicle infrastructure and electric buses and transit, much lesser than what Biden had initially proposed. The bill will also include $11 billion for reducing car crashes and fatalities through a “Safe Streets for All” program. The plan allocates $39 billion to modernize public transit and improve access for disabled people.
Furthermore, the bill has provided $17 billion for airports, ports and waterways. The plan will invest $50-$55 billion in water infrastructure and clean water projects, respectively. Moreover, $65 billion will be invested in high-speed Internet (broadband), $21 billion in environmental clean-up and $73 billion in Power infrastructure, per the verified sources.
Stocks Riding the Bill Approval
Leading producer of structural steel, steel bars, steel joists, steel deck and cold-finished bars in the United States,
Nucor Corp. ( NUE Quick Quote NUE - Free Report) surged around 9.6% on the passage of infrastructure bill on Aug 10.
United States Steel Corp. ( X Quick Quote X - Free Report) that produces and sells flat-rolled and tubular steel products primarily in North America and Europe also jumped 4.7% on the news.
Joining the group was
Caterpillar Inc. ( CAT Quick Quote CAT - Free Report) , a manufacturer and seller of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives worldwide, which rose around 2.5% on Aug 10.
Vulcan Materials Company ( VMC Quick Quote VMC - Free Report) , which is engaged in production, distribution and sale of construction aggregates and other construction materials in the United States and Mexico, also rode the rally with 2.2% gains. Crane Co. ( CR Quick Quote CR - Free Report) , which manufactures and sells engineered industrial products in the United States, Canada, the United Kingdom, Continental Europe, and internationally, also rose about 2.9% on the news. ETFs to Gain
Let’s take a look at some ETFs which can shine bright following the new infrastructure deal:
iShares U.S. Infrastructure ETF IFRA
The fund offers exposure to U.S. infrastructure companies that could benefit from a potential increase in domestic infrastructure activities. The fund has AUM of $657.2 million and charges 40 basis points (bps) in fees (read:
ETF Investment Strategies for Second Half of 2021). Global X U.S. Infrastructure Development ETF ( PAVE Quick Quote PAVE - Free Report)
The fund seeks to invest in companies that stand to benefit from a potential increase in infrastructure activity in the United States, including those involved in the production of raw materials, heavy equipment, engineering, and construction. The fund has AUM of $4.11 billion and charges 47 bps in fees.
Invesco Dynamic Building & Construction ETF ( PKB Quick Quote PKB - Free Report)
The underlying Dynamic Building & Construction Intellidex Index comprises stocks of U.S. building and construction companies. The fund has AUM of $289.3 million and charges 59 bps in fees (read:
Pain or Gain Ahead for Homebuilding ETFs?). The Materials Select Sector SPDR Fund ( XLB Quick Quote XLB - Free Report)
The most-popular material ETF follows the Materials Select Sector Index. This fund manages $8.40 billion in its asset base. The ETF charges 12 bps in fees per year from investors (read:
Stocks at Record: Buy 5 Top Cheap ETFs With High Potential). First Trust Nasdaq Transportation ETF ( FTXR Quick Quote FTXR - Free Report)
The investment objective of the fund is to seek investment results that correspond generally to the price and yield, before the fund's fees and expenses, of an index called the Nasdaq US Smart Transportation Index. With AUM of $1.12 billion, the fund has an expense ratio of 60 bps (read:
Transport ETFs Gain on Solid Q2 Earnings). Global X Autonomous & Electric Vehicles ETF ( DRIV Quick Quote DRIV - Free Report)
The fund seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (EVs), and EV components and materials. This includes companies involved in the development of autonomous vehicle software and hardware as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt. The $1.08-billion fund charges 68 bps in fees.
Vanguard Communication Services ETF ( VOX Quick Quote VOX - Free Report)
The underlying MSCI US Investable Market Communication Services 25/50 Index is designed to capture the large, mid and small-cap segments of the U.S. equity universe. The fund charges 10 bps in fees and has AUM of $4.62 billion (read:
Can Google ETFs Keep Gaining on Q2 Earnings Optimism?). Invesco Water Resources ETF ( PHO Quick Quote PHO - Free Report)
The underlying NASDAQ OMX US Water Index tracks the performance of U.S. exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries. The fund has AUM of $1.87 billion and charges 60 bps in fees (read:
8 ETFs to Buy in Historically Low August).