Dow inches higher to record after Congress passes infrastructure bill

The Dow Jones Industrial Average jumped to a new intraday high Monday after Congress approved an infrastructure spending package.

The blue-chip average edged up about 35 points after gaining more than 230 points at its record high earlier in the session. The S&P 500 traded near the flatline and the Nasdaq Composite ticked up 0.2%.

The U.S. House of Representatives late Friday passed a more than $1 trillion infrastructure bill, sending the legislation to President Joe Biden for his signature. First passed by the Senate in August, the package would provide new funding for transportation, utilities and broadband, among other infrastructure projects.

“Investors have waited for a significant step-up in infrastructure spending for decades,” Citi’s Anthony Pettinari said in a note Sunday. “We view this generational investment as a significant catalyst for growth for a number of our stocks.”

Industrials and materials stocks rallied Monday with those names set to benefit from the spending package. The Global X U.S. Infrastructure Development exchange-traded fund hit a new all-time high dating back to its inception in 2017.

Construction equipment manufacturer Caterpillar led the Dow’s rally with a more than 3% gain. Heavy equipment producer Deere saw its shares rise more than 1%. Nucor and Vulcan Materials each added more than 3%. United Rentals, Martin Marietta and Jacobs Engineering were among the other infrastructure-related gainers.

Elsewhere, chip maker Advanced Micro Devices led gainers on the Nasdaq Composite and the S&P 500. AMD rallied more than 9% after the company announced it won Meta, formerly known as Facebook, as a chip customer and revealed new chip products.

Meanwhile, Tesla founder Elon Musk rattled investors this weekend, asking in a Twitter poll whether he should sell 10% of his stock as a response to political clamoring to tax unrealized gains from equity holdings. As some 58% of respondents said yes, shares in Tesla dropped more than 2%.

The passage of the infrastructure stimulus, an improving Covid situation in the U.S., and a better-than-expected labor market reading boosted investor confidence in the economic recovery. The October jobs report came in Friday better than economists expected as U.S. payrolls added 531,000 jobs last month, according to the Labor Department.

“We expect Equities to continue to climb the ‘wall of worry’, as risks look largely priced in and showing signs of improvement,” JPMorgan’s Marko Kolanovic said in a note Monday.

The three major U.S. stock averages each closed at record highs Friday to cap off a winning week with the S&P 500 posting its 63rd record close in 2021. The S&P 500 is up more than 24% this year.

Investors await fresh inflation readings in the week ahead. The producer price index and consumer price index are slated for release on Tuesday and Wednesday, respectively. Economists expect both reports to remain hot for October.

The Federal Reserve is eyeing both inflation and jobs data to guide its timeline on normalizing monetary policy.

Last week, the Fed announced a plan to begin tapering its pandemic-era economic aid by the end of November, putting the central bank on track to end its asset purchase program by the middle of next year.