Last week, President Joe Biden unveiled his $2.4 trillion infrastructure package. Given the 50/50 split in the Senate, there are some doubts about whether the bill will pass. Largely, its fate will be determined by centrist Senators like Joe Manchin of West Virginia and Krysten Sinema of Arizona.

Both have made a lot of noise about the need to come up with a bipartisan plan, and they have signaled concern about the deficit. Yet, both have ultimately sided with Democrats especially on key votes. So, the expectation looms that Biden's bill should pass especially as infrastructure spending polls well on both sides of the aisle.

Details

Biden's plan looks to invest in upgrading roads, bridges, and water systems. Improve the electrical grid especially as demand is expected to increase. Another component is increasing access to broadband in rural parts of the country.

While most agree with these aspects of the plan, there is some disagreement about the plan's investments in the company's "caregiving" infrastructure which looks to boost senior care by increasing the pay of workers in this sector. The plan also looks to retrofit more than 2 million homes, commercial buildings, and government buildings to become more energy-efficient.

Some other components are $50 billion to incentivize and boost semiconductor manufacturing in the U.S. This is not surprising given the recent crunch in production amid heavy demand. The plan also allocates $175 billion to EVs that will go towards discounts and rebates on purchases. Some of the funds will also go towards building public charging stations which should accelerate the adoption of EVs and yield environmental benefits.

Stock Market and Economic Impact

This is another positive catalyst to an already strong economic outlook. In essence, this plan will add more to aggregate demand and should provide a lift to sectors like construction and industrial production. Further, stronger infrastructure also is correlated with gains in efficiency and productive capacity in the long-term.

Essentially, it means the economy will be capable of producing more output. Given that the labor market is far from being back to normal, the economy should be able to absorb more stimulus without increasing inflationary pressures.

Investors should look at cyclical stocks with some pricing power to take advantage of the economic outlook and the additional stimulus from the passage of this infrastructure bill.