Here are the stocks that could benefit from $4 trillion of infrastructure spending, according to Bank of America

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President Joe Biden is due to present his infrastructure spending plan on Wednesday, the opening salvo in getting legislation through Congress to fix crumbling roads and bridges.

Strategists at Bank of America led by Savita Subramanian say Wall Street already is starting to price in infrastructure spending that could reach $4 trillion. They say the ratio of the S&P 500’s SPX, -0.32% market cap to the M2 measure of money supply is an unusually high 1.7, compared with the average of 1.4 since the 2008 financial crisis.

There is also the downside as well, as the market reacts to likely corporate tax hikes and the rise in the 10-year Treasury TMUBMUSD10Y, 1.726% that lifts corporate debt expenses. “Infrastructure spending is spread out over years, but a corporate tax hike would hit immediately,” they say.

Industrials and materials will likely be the biggest beneficiaries of an infrastructure bill, along with U.S. small-caps, whose sales are highly correlated to U.S. capital spending cycles, the strategists say.

But which ones? The strategists screened S&P 500 companies, back to 1986, to find the highest sales growth sensitivity to the components of U.S. private nonresidential fixed investment.

For the highest sales sensitivity to nonresidential fixed investment in structures, it is a group led by pipeline owner Kinder Morgan KMI, -0.78%, exchange operator Intercontinental Exchange ICE, -1.81%, oil field equipment operator NOV NOV, -1.37%, stock-exchange owner Nasdaq NDAQ, -2.25%, and healthcare real-estate investment trust Ventas VTR, +1.06%.

For the highest sales sensitivity to technology equipment investment, it is pharmaceutical Incyte INCY, -1.07%, microchip equipment maker Lam Research LRCX, +0.40%, electric utility Centerpoint Energy CNP, +0.66%, cloud services company NetApp NTAP, -0.25%, and chip equipment maker Applied Materials AMAT, +0.84%. The highest sales sensitivity to industrial investment includes some of the same companies: Incyte, biotech Vertex Pharmaceuticals VRTX, -1.72%, home-energy technology maker Enphase Energy ENPH, +5.95%, Lam Research LRCX, +0.40%, and fertilizer maker CF Industries CF, -1.17%.

The highest sales sensitivity to intellectual property investment were network services provider Akamai Technologies AKAM, -1.86%, travel services provider Booking Holdings BKNG, -0.70%, internet retailer AMZN, -0.66%, network equipment maker Juniper Networks JNPR, -0.82%, and network services firm F5 Networks FFIV, -0.55%.

The strategists also looked at companies that would benefit from reshoring, which include paper and packaging firm WestRock WRK, +0.57%, Ventas, CenterPoint Energy, high-tech lender SVB Financial SIVB, +4.53% and natural-gas distributor Duke Energy DUK, -1.37%.

Waiting for Pittsburgh

Biden is due to deliver remarks in Pittsburgh on infrastructure spending shortly after trading ends, at 4:20 p.m. Eastern. The White House said what is called The American Jobs Plan will include $2 trillion in spending over 10 years and will be fully paid for with $2 trillion in taxes over 15 years, including by hiking the corporate tax rate to 28%, increasing the global minimum tax on U.S. multinationals and establishing what is called a 15% minimum tax on book income. Published reports say the White House will lay out plans for roughly $2 trillion more in spending on education and healthcare in a month’s time.

The economics calendar includes the ADP estimate of private-sector employment, as well as the Chicago-area purchasing managers index and pending-home sales releases.

The Organization of the Petroleum Exporting Countries is meeting, ahead of the larger gathering on Thursday that will include nonmembers such as Russia. OPEC on Tuesday revised lower its estimate of oil demand, citing rising COVID-19 infections and lockdown measures being reimposed.

Pfizer PFE, -1.39% and BioNTech BNTX, +8.89% said their coronavirus vaccine was 100% effective in 12-to-15-year-olds.

Apple AAPL, -1.23% rose in premarket trade after UBS upgraded the iPhone maker to buy from neutral, citing hopes of a branded electric vehicle.

BlackBerry BB, +1.52% shares fell 6% after the security software provider reported weaker-than-expected revenue, which the company blamed on a delay in selling patent licenses.

Athletic apparel maker Lululemon Athletica LULU, +0.29% reported stronger-than-forecast quarterly earnings. Pet-food supplier Chewy CHWY, +1.94% also topped expectations.

Online food delivery company Deliveroo flopped in its first day of trading, with the Amazon-backed company sliding as much as 30% in London trade.

Rep. Matt Gaetz was the top trend on Google after the New York Times reported he is under investigation over a relationship with a 17-year-old.

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Nasdaq 100 gains

Futures on the S&P 500 ES00, +0.10% edged up while Nasdaq 100 NQ00, +0.58% futures posted stronger gains, after two straight declines for the S&P 500. The yield on the 10-year Treasury slipped to 1.72%.

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