US construction company stocks are rallying on the back of the $1.2 trillion infrastructure bill finally getting past lawmakers.
On Saturday (Nov. 6), Congress passed the long-awaited bill, hailed by president Joe Biden as a “once in a generation” investment. Today (Nov. 8), the legislation that the White House claims ”will rebuild America’s roads, bridges and rails, expand access to clean drinking water, ensure every American has access to high-speed internet,” and more, made it to the president’s desk to be signed into law.
One of the biggest commitments in the bill, $110 billion, has been earmarked to repair roads, highways, and bridges. As a consequence, construction companies received a boost, with several seeing their stocks surge.
When markets opened, stocks of heavy-equipment manufacturer Caterpillar posted one of the biggest jumps, at more than 4%. Stocks of steel manufacturers United States Steel Corporation and Nucor Corporation also surged more than 4%. Alabama’s Vulcan Materials—the country’s largest producer of construction materials such as gravel, crushed stone, and sand—and North Carolina-headquartered Martin Marietta Materials—supplier of construction aggregates and heavy building materials—were both up more than 3%.
The Global X US Infrastructure Development ETF (PAVE), a popular exchange-traded fund (ETF) comprising stocks of more than 100 companies that derive at least 50% of revenue from infrastructure construction, materials and equipment supply, and related services in the US, made substantial gains.
The Dow hit a record high on the back of the Dow Jones Industrial Average rising 88.51 points, or 0.24%, to 36,416.46 at the opening bell. The S&P 500 and Nasdaq Composite, too, made gains of 0.08% and 0.15% respectively
While the market has gotten somewhat excited on the news, analysts at investment bank Cowen said that revenue opportunities from the bill would only emerge late next year or early 2023.