Stock Groups

Popular infrastructure ETF jumps to record after House passes Biden’s plan

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U.S. president Joe Biden addresses the International Union of Operating Engineers (Local 324) training facility in Howell. October 5, 2021.

Jonathan Ernst | Reuters

After the House of Representatives passed the $1 trillion bill, infrastructure stocks rose Monday morning. President Joe Biden’s signature achievement and reward for investors who bet in his plan made the stock market more volatile.

In the aftermath of 9/11, those stocks proved to be strong. Global X US Infrastructure Investment ETFThe fund trades as ticker PAVE and gained 1.5% in just a few minutes. Top holdings of the fund include stocks such as NucorAnd Vulcan MaterialsThe remained steady at the higher end of its range on Monday morning.

Washington’s need to invest in infrastructure has long been an issue of discussion. However, efforts have largely failed before this week.

Investors have been waiting for significant increases in infrastructure spending for many decades. From Obama’s “shovel-ready” projects to Trump’s “infrastructure week”, they’ve been mostly disappointed. We see this generational investment in the same way as any other catalyst to growth for many of our stocks,” Anthony Pettinari, Citibank’s chief financial officer, said in a note for clients.

United RentalsThe ETF’s other large component, the equities, gained 2% on Monday morning trading and could have a strong future due to the new legislation, Bernstein analyst Chad Dillard stated in a note to clients.

“With >$500B of incremental infrastructure spend committed, contractors’ ability to take on additional work will be limited by their balance sheets, which will incentivize more rental than equipment purchase. According to the Bernstein note, URI was best positioned for benefit.”

PAVE was not the only stock that rallied in support of infrastructure stocks. Despite the fact that the ETF doesn’t include infrastructure stocks, its strong performance was a testament to its inclusion. CaterpillarThe grew by almost 4%

This story was contributed by Gina Francolla and Michael Bloom of CNBC.

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