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ETFs and stocks react positively to infrastructure bill; What to expect next?

ETFs and stocks react positively to infrastructure bill; What to expect next?

The financial market is still reacting to the passing of the bipartisan $1.2 trillion infrastructure bill by the U.S. senate. 

Some stocks and exchange-traded funds that are bound to benefit from the ambitious bill have recorded gains within hours of the bill’s passage. Generally, industries in the production of raw materials, heavy equipment, engineering, and construction might gain as the U.S. pumps more resources towards improving infrastructure. 

Socks that gained include structural steel, steel bars, steel joists, steel manufacturing firm, Nucor Corp. (NYSE: NUE) The stock surged by almost 10%. Elsewhere, Steel Corp (NYSE: X) also gained 4.7% after the news.

Manufacturer and seller of construction and mining equipment firm Caterpillar Inc (NYSE: CAT) rose 2.5%, while Vulcan Materials Company (NYSE: VMC) focusing on production, distribution and sale of construction aggregates, surged 2.2%. Crane Co. (NYSE: CR) also jumped on the rally, surging 2.9% on the news.

ETFs that might gain from infrastructure bill passage

Furthermore, several ETFs are in line to benefit from the renewed interest in infrastructure in the long term impacting the sector in general.

It will also be vital to monitor the inflow of capital into ETFs for the rest of the year. Notably, the global exchange-traded funds recorded an inflow of $639.8 billion in capital for the first six months of 2021. The figure represents more than double compared to the first half of 2020.

iShares U.S. Infrastructure ETF (BATS: IFRA) that enables investors to put money in U.S. infrastructure companies is in a pole position to attract more capital inflows. The ETF boosts of about $657 million in assets under management. 

The bill has also increased attention towards the electric vehicle industry as the U.S. moves towards reducing carbon emissions. The bill has allocated $7.5 billion towards the sector. Leading vehicle manufacturers are likely to keep making significant investments driving attention to EV ETFs like Global X Autonomous & Electric Vehicles ETF (NASDAQ: DRIV). 

The fund invests in firms involved in developing autonomous vehicle technology, electric vehicles, and EV components and materials. The ETF has $1.08-billion assets under management. 

The bill has generally sparked increased activity under infrastructure, presenting an opportunity for ETFs like Global X U.S. Infrastructure Development ETF (BATS: PAVE) to gain. The fund with $4.11 billion in assets under management invest in companies that are bound to benefit from a potential increase in infrastructure activity. 

Additionally, Invesco Water Resources ETF (NASDAQ: PHO) will likely offer investors lucrative returns. The ETF tracks the performance of U.S. exchange-listed companies in creating products designed to conserve and purify water for homes, businesses and industries. The fund has $1.87 billion in assets under management.

Other funds likely to be impacted by the bill include $4.62 billion in assets under management Vanguard Communication Services ETF (NYSEARCA: VOX), The Materials Select Sector SPDR Fund (Nasdaq: XLB) with $8.40 billion in AUM and Invesco Dynamic Building & Construction ETF (NYSEARCA: PKB) with AUM of $289.3 million.

Blockchain ETFs likely to benefit

Worth noting is that, during the bill’s passing, senators blocked a proposal to enact more regulations to manage the cryptocurrency sector. The move came as a boost for the cryptocurrency sector, which might positively impact blockchain ETFs. 

Notably, despite the recent crypto volatility, blockchain ETFs have gained in the U.S. According to data provided by ETF database, four selected blockchain exchange-traded funds listed on the U.S. exchanges recorded an average ROI of 74% between May 2020 and May 2021.

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