President Joe Biden is due to present his infrastructure spending plan on Wednesday, the opening salvo in getting legislation through Congress to fix crumbling roads and bridges.
Strategists at Bank of America led by Savita Subramanian say Wall Street already is starting to price in infrastructure spending that could reach $4 trillion. They say the ratio of the S&P 500’s SPX,
There is also the downside as well, as the market reacts to likely corporate tax hikes and the rise in the 10-year Treasury TMUBMUSD10Y,
Industrials and materials will likely be the biggest beneficiaries of an infrastructure bill, along with U.S. small-caps, whose sales are highly correlated to U.S. capital spending cycles, the strategists say.
But which ones? The strategists screened S&P 500 companies, back to 1986, to find the highest sales growth sensitivity to the components of U.S. private nonresidential fixed investment.
For the highest sales sensitivity to nonresidential fixed investment in structures, it is a group led by pipeline owner Kinder Morgan KMI,
For the highest sales sensitivity to technology equipment investment, it is pharmaceutical Incyte INCY,
The highest sales sensitivity to intellectual property investment were network services provider Akamai Technologies AKAM,
The strategists also looked at companies that would benefit from reshoring, which include paper and packaging firm WestRock WRK,
Waiting for Pittsburgh
Biden is due to deliver remarks in Pittsburgh on infrastructure spending shortly after trading ends, at 4:20 p.m. Eastern. The White House said what is called The American Jobs Plan will include $2 trillion in spending over 10 years and will be fully paid for with $2 trillion in taxes over 15 years, including by hiking the corporate tax rate to 28%, increasing the global minimum tax on U.S. multinationals and establishing what is called a 15% minimum tax on book income. Published reports say the White House will lay out plans for roughly $2 trillion more in spending on education and healthcare in a month’s time.
The economics calendar includes the ADP estimate of private-sector employment, as well as Chicago purchasing managers index and pending-home sales releases.
The Organization of the Petroleum Exporting Countries is meeting, ahead of the larger gathering on Thursday that will include nonmembers such as Russia. OPEC on Tuesday revised lower its estimate of oil demand, citing rising COVID-19 infections and lockdown measures being reimposed.
Online food delivery company Deliveroo flopped in its first day of trading, with the Amazon-backed company sliding as much as 30% in London trade.
Rep. Matt Gaetz was the top trend on Google GOOGL,
A Tokyo bar has a stock market theme, with drinks named “Margin Call” and “Lehman Shock” and books on value investing.
The Mars rover took a stunning selfie.
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