Infrastructure, health-care and defense stocks reportedly stand to rally in the wake of President Donald Trump being cleared by Special Counsel Robert Mueller of conspiring with Russia in the 2016 U.S. election.
CNBC cited analysts as saying such stocks could surge as Trump shifts his focus back to policymaking, both against and, in some cases, with the Democrats.
But any progress could be turned to gridlock if the partisan bickering continues in the wake of the Mueller probe, CNBC cautioned.
As for the three sectors in the spotlight, Trump recently said he and House Speaker Nancy Pelosi are still talking about an elusive infrastructure deal.
CNBC said “Strategas has an infrastructure basket consisting of about 20 companies in traditional highway infrastructure that could benefit from any deal. The portfolio was created in 2008 to play President Barack Obama’s stimulus in 2009,” and the constituents have gained with the passage of highway bills over the years, according to Strategas.
The member stocks include pipeline services company Aegion Corp. (AEGN), general contractor Granite Construction (GVA), engineering company KBR (KBR) and building material company Simpson Manufacturing (SSD).
However, CNBC warned that “a large bipartisan infrastructure bill is unlikely if Trump uses the Mueller outcome against the Democrats, and they in turn keep their intense investigations of the president.”
In the wake of the Mueller report, CNBC said health insurers stand to benefit because now a Democratic sweep in the Senate is less likely in 2020, alleviating the risks of having big changes to the health-care system, according to one industry analyst.
Lance Wilkes, equity analyst at at Bernstein, said in a note that insurers and government Managed Care Organizations took a hit since the introduction of the “Medicare-for-all” bill in the House as Anthem (ANTM), UnitedHealth (USD), Centene (CNC) and Humana (HUM) were down as much as 11 percent.
Defense stocks have constantly climbed since Trump’s election at the end of 2016, as the White House continuously boosted its military budget over the past two years.
Many of the large defense stocks including Lockheed Martin (LMT) and Northrop Grumman (NOC) have posted double-digit gains on the improved outlook for U.S. defense spending under the Trump administration.
For his part, Trump on Monday vented his anger at the inquiry and vowed investigations into unnamed political enemies who did “evil” and “treasonous things.”
The Republican president and his allies in Congress went on the offensive a day after the release of a summary of Mueller’s report gave him a political victory ahead of his 2020 re-election bid, with no allegations of criminal wrongdoing brought against him at the end of a nearly two-year-long inquiry, Reuters said.
U.S. Attorney General William Barr on Sunday released a four-page summary of the findings of the investigation that detailed Russian interference in the 2016 election.
“There are a lot of people out there that have done some very, very evil things, very bad things, I would say treasonous things against our country,” Trump told reporters at the White House, without mentioning anyone by name or citing specific actions.
Senator Lindsey Graham, the Republican Senate Judiciary Committee chairman and a Trump ally, said he would ask Barr to appoint a special counsel to investigate the origins of the Russia probe, which was first handled by the FBI and then by Mueller after the president fired the agency’s director, James Comey, in May 2017.
The Republican president pledged new investigations but did not specify who would conduct them or who should be targeted. Trump in the past has called for investigations of Hillary Clinton, the Democratic candidate he defeated in 2016.
“Those people will certainly be looked at. I’ve been looking at them for a long time,” Trump said in the Oval Office sitting alongside visiting Israeli Prime Minister Benjamin Netanyahu. “And I’m saying: why haven’t they been looked at? They lied to Congress. Many of them. You know who they are.”
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