U.S. stocks look set to move higher on Monday, after the S&P 500
notched its 28th record high of the year on Friday, with inflation fears appearing to ease.
Investors will be closely watching the Federal Reserve’s latest monetary policy decision on Wednesday as well as what Chair Jerome Powell has to say.
President Joe Biden’s infrastructure plans are also in focus, after talks with Senate Republicans over a $1.7 trillion deal collapsed last week. Bipartisan efforts over a compromise are continuing, while a Democratic-only Reconciliation Bill is also seen as an option. Biden has set a summer deadline for Congress to pass his top legislative priority.
In our call of the day, Citi strategists looked at the prospects for Biden’s infrastructure plans and the stocks that are likely to benefit.
The strategists, led by Edward Morse, said it now looked likely that passable legislation would be below the $1.7 trillion of infrastructure but higher than $1 trillion. The team looked at which areas would still make the cut in terms of spending.
“Enhanced policy support for carbon capture, utilization and storage (CCUS) likely survives and would have bipartisan support if a reconciliation process fails,” they said.
CCUS involves capturing carbon dioxide from large sources, such as power plants, and storing it to be recycled. It can play an “important and diverse” role in meeting global energy and climate goals, according to the International Energy Agency.
“The bill could jump-start an industry that could grow to be larger than today’s domestic oil-and-gas industry,” Citi strategists said. That would change the terminal value debate over companies such as Exxon Mobil
which has more than 30 years of experience in CCUS, and other established names in the space, including Baker Hughes
and Kinder Morgan
Renewables adoption is also poised to accelerate, they said, with the demand for clean energy boosted by Biden’s agenda on climate change. It could potentially lead to significant investments in existing renewable facilities and building new solar and wind farms.
“We think this bodes well for specialty contractors, such as MasTec
and engineering and construction-focused Fluor
given their expertise in clean energy infrastructure and management, as well as for General Electric
given its wind turbine portfolio and related digital offerings,” they said.
Two other long-term themes to watch out for are electric-vehicle infrastructure and green hydrogen, which is produced when renewable energy powers the electrolysis of water — breaking it into its component elements of hydrogen and oxygen.
MasTec, Rockwell Automation
and Dover Corp
are all set to benefit from EV proliferation, while General Electric, Emerson Electric
can capitalize on the emergence of green hydrogen, they added.
also pointed higher ahead of the open after the S&P 500
closed at a record high on Friday, its 28th new milestone this year. The yield on the 10-year Treasury
remained anchored below 1.50%.
jumped sharply on Sunday, after Tesla
Chief Executive Elon Musk said the electric-vehicle company “only” sold around 10% of its holdings and would resume allowing transactions using the cryptocurrency when 50% of energy used to mine it comes from clean sources. Bitcoin was trading at $39,507.35 early on Friday and has climbed 11.7% in the past 24 hours, according to CoinDesk.
Royal Dutch Shell
is reviewing its holdings in the largest oil field in the U.S. — the Permian Basin, mostly in Texas — according to reports on Sunday. A sale could raise up to $10 billion, CNBC said.
U.K. Prime Minister Boris Johnson is expected to confirm a four-week delay to the next planned relaxation of COVID-19 restrictions in England due to the spread of the delta coronavirus variant.
Leaders of the G-7 (Group of Seven) countries rallied around Biden’s call to challenge China over human rights and vowed to donate one billion COVID-19 vaccine doses to poorer nations over the next year.
reported that a Phase 3 study of its COVID-19 vaccine showed it was 90.4% effective overall. The 29,960-patient study also found that the vaccine provided 100% protection against moderate and severe disease. The biotech intends to file for regulatory authorizations in the third quarter.
Technology firms use remote monitoring to help honey bees.
Disruption to shipping could delay Christmas orders.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Want more for the day ahead? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch writers