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Here's Why Steel Stocks Got Crushed Today

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The steel industry took a beating on the stock market on Thursday as investors reacted to the news that President Donald Trump’s trillion-dollar infrastructure plan was likely to be delayed until next year. Shares of the popular Market Vectors Steel ETF (SLX - Free Report) were down more than 4% in afternoon trading.

Trump’s Plan

Trump has been quite outspoken about his pro-manufacturing leanings, and rebuilding the nation’s infrastructure was seen as one of his core campaign promises.

“We will build new roads and highways and bridges and airports and tunnels and railways all across our wonderful nation.  We will get our people off of welfare and back to work, rebuilding our country with American hands and American labor,” the president said in his inaugural address.

For this reason, stocks involved in the manufacturing industry, including steel stocks, have been on the rise since Trump’s surprise victory in November. Heading into the week, SLX was up nearly 30% from Election Day.

It is worth noting that although they disagree on the proper distribution of funds, Senate Democrats have also unveiled their own trillion-dollar infrastructure plan. Both Trump and the Democrats seem to agree that the nation’s roads, bridges, railroads, and airports need a facelift.

The Delay

Of course, Trump’s infrastructure pledge was far from his only campaign promise, and as politics goes, some plans have to wait in line. With the repeal of Obamacare, tax reform, military spending, and debt ceiling fights all in the near-term schedule, it looks like Trump’s infrastructure plan is on pause.

According to Axios, a news site launched by Politico co-founder Jim VandeHei, the president and Congressional Republicans have devised a new plan to push off infrastructure spending and still ensure a political victory.

Citing Republican sources, Axios said that the party is planning to delay the infrastructure deal until next summer; by then, they figure Democrats will be under too much midterm election pressure to put up a big fight on a bill that should have blue-collar support.

Market Effects

As mentioned above, the steel industry is taking a big hit today, with SLX and companies like U.S. Steel (X - Free Report) down big.

The news is also affecting the rest of the manufacturing industry, including companies like Caterpillar (CAT - Free Report) , Emerson Electric (EMR - Free Report) , Lockheed Martin (LMT - Free Report) , and Corning (GLW - Free Report) . Interestingly enough, this story is breaking on a day that all of these companies—and many more—dispatched representatives to meet with President Trump in the White House.

Overall, President Trump met with leaders from more than 20 manufacturing companies to discuss taxes, regulation, and infrastructure.

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