How Markets Could Respond to a Biden Infrastructure Bill

The Potential for Bipartisan Support

As President Biden begins his first full week in office, many investors are hoping that a substantial infrastructure bill could be coming soon. Democrats hold only a slim majority in the House and Senate, but an infrastructure bill could gain bipartisan support if lawmakers see it as a way to create jobs and give the battered economy a lift.

This infrastructure spending could take a variety of forms. Many expect to see investments in traditional infrastructure like roads, as well as in more modern initiatives like alternative energy and 5G wireless broadband networks.

Roads and Construction

Spending on roads and other traditional infrastructure could give companies like Caterpillar (CAT) and Deere (DE) a boost. These heavy machinery suppliers have struggled over the past year. Many businesses have put off purchasing expensive equipment due to economic downturn and uncertainty.

Meanwhile, Chinese heavy equipment makers such as Sany Heavy Industry Co. and Zoomlion Heavy Industry Science & Technology Co. have outpaced their US counterparts recently. Though construction in China was interrupted at certain points in 2020 due to the pandemic, it seems to have bounced back more quickly than construction stateside.

Green Energy and 5G Networks

Investments in green energy and 5G networks could give other industries a lift. President Biden has proposed setting up 500,000 electric vehicle chargers across the country. This could benefit the entire EV industry as charging logistics currently pose a significant roadblock for EV makers trying to compete against traditional automobiles.

Meanwhile, many expect that funding for 5G networks will be a priority for the Biden administration as lawmakers work to make sure Americans have equal access to digital resources. This could benefit tower company SBA (SBA), utilities provider Clearway (CWEN), and the tech industry as a whole.

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