Business
Wall Street apprehinsive as Senate votes for $1trillion Infrastructure Bill
U.S. Senate moved closer to passing a $1 trillion bipartisan infrastructure package on Saturday after lawmakers from both parties came together and voted to clear a key procedural hurdle, but the move was slowed as a few Republican opponents refused to speed up its approval.
Overcoming the 60-vote hurdle was a sign that the tenuous alliance between Republicans and Democrats could hold on to the public works package. At least 10 Republicans had to join all Democrats to advance the measure past a filibuster — and in the end, 18 Republican senators voted to advance the package.
The final votes tally was 67-27.
Senate Republican leader Mitch McConnell of Kentucky has so far allowed the bill to progress, and his vote — “yes” — was closely watched. “This is a compromise,” he said before the vote.
Senators have spent the past week processing nearly two dozen amendments to the 2,700-page package, but so far none has substantially changed the framework of the public works package. Some senators are insisting on more amendments — including one on cryptocurrency and a longshot effort by defense hawks to add $50 billion for shipbuilding and other defense-related infrastructure.
Senators are now set to turn to the next item on Biden’s agenda, the budget outline for a $3.5 trillion package of child care, elder care, and other programs that is a much more partisan undertaking and expected to draw only Democratic support.
Meanwhile, Wall Street was apprehensive of the bill as investors predicted that the next two months could be rocky. Few expect the U.S. government will default on its debt and spend the $22 trillion Treasury market. Still, some analysts say a drawn-out debt ceiling fight could increase volatility in a U.S. stock market where valuations have become stretched with prices near record highs.
Investors will get additional insights into the pace of inflation with the release of the consumer price index reading on Wednesday and the producer price index on Thursday.
Ultra-low interest rates, along with the highest percentage of companies in the S&P 500 beating analyst expectations since at least 1994, have pushed the S&P 500 up 17.2% for the year to date. The S&P 500 now trades at 21.7 times its expected earnings over the next 12 months, down slightly from the 24 times expected earnings at the start of the year yet still well above its historical average.
While passage of the upcoming infrastructure and reconciliation bills will likely bolster the economy over the next several years, short-term concerns over rising taxes and the debt ceiling could weigh on the S&P 500 in the months ahead.
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