NEW YORK, Jan 29 (Reuters) - U.S. President Donald Trump is set to give his first State of the Union address on Tuesday evening, with a broad audience - including stock investors - expected to tune in to the widely televised speech.
Historically, stock market reaction has been mixed following presidents' new year messages. On average, the broad S&P 500 declined just 0.05 percent the day after, since 1965 when Lyndon Johnson gave the first televised evening State of the Union address.
The S&P 500 jumped 1.4 percent the day after Trump's speech last February, as his unexpectedly measured tone boosted investor optimism that he could deliver on pro-business campaign promises, but investors doubt a repeat of such a move would come this time.
Stocks linked to any specific theme in Trump's speech could turn volatile. Here are some to watch, based on potential topics he may address:
Trump is expected to detail his long-awaited plan to help rebuild the nation's infrastructure. The president said on Wednesday his plan would result in about $1.7 trillion in overall investment over the next 10 years, more than he had previously announced.
Trump's comments could shine a spotlight on construction and engineering stocks such as Granite Construction Inc, AECOM and Fluor Corp, building materials stocks such as Vulcan Materials Co, Martin Marietta Materials Inc and Eagle Materials Inc and machinery stocks such as Caterpillar Inc.
Infrastructure-linked shares could start to fluctuate if the speech kicks off a bumpy legislative path for a spending bill. Some investors and analysts see a favorable climate for such stocks regardless of any federal package.
In the wake of delivering his "America First" agenda at the World Economic Forum in Switzerland, Trump could continue to promote his position on trade on Tuesday.
Trump last week told the business summit in Davos that the United States would "no longer turn a blind eye" to what he described as unfair trade practices.
Such a focus could affect shares of steel companies such as Nucor Corp and U.S. Steel Corp, which have vacillated since Trump's election on prospects for protectionist measures.
Last week, Trump imposed steep tariffs on washing machines and solar panels, boosting shares of appliance maker Whirlpool Corp and some solar companies such as Sunrun Inc and Vivint Solar Inc.
Trump also could address the North American Free Trade Agreement on the heels of the latest negotiations involving the United States, Canada and Mexico.
Railroad Kansas City Southern and beer, wine and spirits maker Constellation Brands Inc are among several stocks that could sway on NAFTA comments.
PRESCRIPTION DRUG PRICES
Trump has occasionally sounded off on high drug prices since his election, and some analysts are bracing for similar talk on Tuesday. "On U.S. drug pricing, we understand Trump may (again) disparage drug companies on Tuesday's State of the Union address," Bernstein analyst Tim Anderson said in a recent analyst note.
The biotech and pharmaceutical industries could come under pressure, including the iShares Nasdaq Biotechnology ETF and the SPDR S&P Biotech ETF.
Comments about high drug prices could put a spotlight on companies in therapeutic areas that have come under scrutiny in the past, such as multiple sclerosis and rheumatoid arthritis, according to Mizuho Securities analyst Salim Syed. Biogen and Amgen Inc are among the companies selling such treatments.
NATIONAL SECURITY AND IMMIGRATION
National defense and a strong military have been consistent themes under Trump. Defense stocks such as Northrop Grumman and Raytheon could come into focus, although many industry shares are around all-time highs already.
Immigration reform is another consistent topic for Trump and one he could address on Tuesday. For example, Trump has called for changes to the H-1B work visa program widely used to employ foreign tech workers in the United States. Mention of that program could signal plans to take more steps, and could affect Indian IT outsourcing companies including Infosys Ltd and Wipro Ltd.
Any hardline comments on illegal immigration or crime also could put private prison operators Geo Group Inc and CoreCivic Inc in focus. (Reporting by Lewis Krauskopf in New York; Additional reporting by Noel Randewich in San Francisco and Sinead Carew in New York; Editing by Richard Chang)