Stock Market Today: New Infrastructure Hopes Hoist Indexes to New Heights
President Biden's backing of a bipartisan infrastructure spending bill sparked fresh optimism that pushed the S&P 500 and Nasdaq to record closes.
And just like that, it's "Infrastructure Week" again.
Things were already looking good for stocks early Thursday after unemployment claims for the week ended June 19 came in lower by 7,000 filings to 411,000. But the indexes picked up even more steam after President Joe Biden announced his backing of the "Bipartisan Infrastructure Framework" – a $1.2 trillion infrastructure spending compromise backed by a bipartisan group of senators.
While the deal still must pass muster in Congress, investors were clearly cheered by the signs of progress.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Investors liked what they saw, and stocks moved higher on the news," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, a registered investment advisor (RIA). "Although the proof will be in the pudding, if the full House and Senate are able to get it across the finish line and the President can sign it into law.
The Dow Jones Industrial Average advanced a healthy 1.0%, to 34,196, led by industrial giants Boeing (BA, +2.9%) and Caterpillar (CAT, +2.6%), as well as financials such as Goldman Sachs (GS, +2.1%) and Travelers (TRV, +1.4%).
"From an asset allocation perspective, value seems to be benefiting most from this news as many of the infrastructure-oriented stocks tend to land in this universe," says Brian Price, head of investment management for Commonwealth Financial Network, another RIA.
The S&P 500 (+0.6% to 4,266) and Nasdaq Composite (+0.7% to 14,369) also finished in the black, and in new record territory to boot.
Other action in the stock market today:
- The small-cap Russell 2000 improved by 1.3% to 2,333.
- Rite Aid (RAD) sat out the day's broad-market rally, sinking 14.5% after the drugstore chain reported earnings. In its fiscal first quarter, RAD reported adjusted earnings of 38 cents per share – above what analysts were expecting – but its $6.16 billion in revenue came up short of estimates.
- Several digital advertising stocks gained ground after Alphabet's (GOOGL, +0.3%) Google postponed plans to end support for third-party tracking cookies, with the search engine now expecting to begin this initiative in mid-2023 versus early 2022. Among the big movers today were Trade Desk (TTD, +16.0%), Magnite (MGNI, +8.2%) and PubMatic (PUBM, +13.0%).
- U.S. crude oil futures rose 0.3% to settle at $73.30 per barrel.
- Gold futures slipped 0.4% to finish at $1,776.70 an ounce.
- The CBOE Volatility Index (VIX) slipped for a fourth consecutive day, by 2.8% to 15.85.
- Bitcoin continued to rebound, improving by 5.6% to $34,786.42. (Cryptocurrencies trade 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
How to Play Renewed Infrastructure Hopes
The sudden traction on any sort of infrastructure bill is a favorable sign for equity investors.
"Infrastructure spending strengthens an already very strong economic growth outlook," says Jeff Buchbinder, equity strategist for independent broker-dealer LPL Financial. "We will very likely get more than $2 trillion in additional spending this year – including this bipartisan agreement and a partisan 'social infrastructure' deal later this year, which bolster the outlook for corporate profits and should keep this bull market going strong well beyond 2021."
As far as the Bipartisan Infrastructure Framework itself goes, it pares down many of Biden's hoped-for initiatives, but a few remain. The plan calls for providing high-speed internet to all Americans, which should be a boon to 5G-related stocks, and it also targets climate, electric vehicles and other green initiatives, potentially providing more lift for clean energy stocks.
Though, those industries might have been just fine either way.
"The prospect of legislation is clearly positive, but the reality is that infrastructure investment is going to be strong going forward regardless of what happens on Capitol Hill," says Josh Duitz, portfolio manager of the Aberdeen Standard Global Income Infrastructure Fund (ASGI). "The green energy and 5G revolutions are already happening and this bill would simply accelerate infrastructure spending."
And naturally, the core goal remains: improving and building out the nation's infrastructure – from roads and bridges to electricity grids and water systems.
Nothing is set in stone, but this sudden spurt of progress bodes well for these 14 infrastructure stocks, each of which stands to benefit from at least one provision of Washington's potential compromise.
Disclaimer
Kyle Woodley was long BA as of this writing.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.
Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.
You can check out his thoughts on the markets (and more) at @KyleWoodley.
-
Is Uber Stock a Buy, Hold or Sell After Earnings?
Uber stock is sinking Thursday after the ride-hailing firm came up short of a key Q3 metric, but analysts have yet to adjust their ratings. Here's what you need to know.
By Joey Solitro Published
-
Why Microsoft Is the Worst Dow Jones Stock After Earnings
Microsoft stock is sinking Thursday even after the tech giant reported higher-than-expected earnings for its fiscal first quarter. Here's what you need to know.
By Joey Solitro Published
-
Stock Market Today: Stocks Slide as Solid GDP and Softer Inflation Vex Rate Cut Bets
Encouraging economic news damped hopes for accelerated rate cuts.
By Dan Burrows Published
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have Today
Google parent Alphabet has been a market-beating machine for ages.
By Dan Burrows Published
-
One Analyst Says Alphabet Remains a Top Stock Pick After Earnings. Here's Why
Alphabet stock is higher after the Google parent reported strong advertising and cloud growth in Q3. Here's why one analyst thinks there's more to come.
By Joey Solitro Published
-
Stock Market Today: Nasdaq Hits New High Ahead of Alphabet Earnings
The Google parent is one of several mega caps reporting earnings this week, with results due out after Tuesday's close.
By Karee Venema Published
-
Stock Market Today: Stocks Renew Rally Ahead of Mag 7 Earnings
The Dow Jones led the major indexes higher on the strength of old-school industrial stalwart 3M.
By David Dittman Published
-
Stock Market Today: Stocks Pause but Nvidia Hits New All-Time Highs
The major equity indexes were mostly mixed on Monday, but Nvidia hit yet another new all-time high.
By David Dittman Published
-
Stock Market Today: Markets March Higher as Strong Earnings Offset Weakness in Chips
Upbeat quarterly results helped stocks bounce back with broad-based gains.
By Dan Burrows Published
-
Stock Market Today: UnitedHealth Selloff Drags on Dow
While the main indexes ended in the red, Walgreens Boots Alliance had its best day since 2008.
By Karee Venema Published