Recently, the U.S. senate has passed a $1 trillion bill that will allocate funds towards various infrastructures in America. Structures such as roads, bridges, electrical grid, and internet infrastructure are all in the bill. Although this bill has been approved by the senate, it is now being sent to the House of congress. The House has not voted on the infrastructure bill yet. And with both political parties strongly divided on this bill, it is unclear whether or not the bill will pass. However, if the bill does pass this would trigger a large event in the stock market and some specific companies. Let’s dive into how this bill can influence the stock market
Infrastructure Influence
The first thing you will hear anyone say about this bill is its price tag. Whether it is a finance journalist, news reporter, politician, or your ordinary citizen… everyone brings up the $1 trillion price of the bill. Not only is this eye catching but it carries a serious amount of weight.
Due to the pandemic, the U.S. government began printing money to put into the economy to keep it afloat. Not only did this keep the economy running but it also stopped the plummeting stock market, at the time. The stimulus kept bond interest rates low and investors calm. This made the stock market look like a great opportunity and hence the stock market began to rebound. Now that the economy is getting back to its feet, it is debated whether or not stimulus is needed anymore. So what does the infrastructure bill have to do with the stock market?
Well currently, it looks like the Fed is going to begin slowing down and eventually stop stimulus. This would spell bad news for the stock market as this “tapering” would cause money to flow out of the stock market due to fear and safe rising bond rates. So what might make an investor want to stay in the stock market? Perhaps a $1 trillion package that puts money into the economy once more. Hence why the infrastructure bill has been so avidly talked about recently. Many investors see the bill passing as another stimulus being injected into the economy which would make the stock market the best place to get a return.
Companies to Keep an Eye On
Now that we know why the infrastructure bill is so important to the stock market, let’s see if we can make more use of this information. It is well known that if the infrastructure bill gets passed that the government won’t be doing it themselves. The government will contract companies and unions to do the work. This means that any public company that might receive some of this infrastructure money will be seeing a significant increase in cash flow. To keep things short, I would keep an eye on $CAT and $ETN. Both of these companies will likely play a large role in roads and the electrical grid, respectively. $CAT will be supplying lots of heavy machinery and $ETN will supply a lot of electrical equipment. Other companies will profit but $CAT and $ETN are almost certain to be influenced by a passed infrastructure bill.
See what’s in the infrastructure bill! https://apnews.com/article/joe-biden-business-bills-38b84f0e9fcc8e68646eedf6608c4c70
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