Infrastructure, Defense Stocks Affected By Budget Deal?

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

U.S. stocks opened slightly higher even as world markets are mostly lower, albeit with quite limited losses on the day. The Dollar Index continues to show little life, falling to its lowest level since the end of 2009. Despite the dollar’s weakness, most commodities are posting modest losses after a strong run-up last week. Crude oil, gasoline and heating oil, and gold and silver all closed out the week at record highs on Friday.

Congress and the president stayed up late on Friday, but struck a last-hour deal to avert a shutdown of the federal government. The agreement seeks a record $38 billion in spending cuts for the rest of the government’s 2011 fiscal year.

On that news, traders will be eyeing various infrastructure and defense stocks which could move a little during today’s trade. (See: Firms That Make Billions From Government)

a) Infrastructure companies that have the government as their big customer may be in focus after President Obama said on late Friday night “needed infrastructure projects will be delayed” as part of the cuts.

Percentage of total sales from government:


Jacobs Engineering 20%

Fluor 15%

b) Defense stocks might also get some attention as those companies get a large portion of their revenues from the government. Although there will be cuts in defense spending, the agreed amount will likely be $2 billion less than what Republicans had been seeking.

Percentage of total sales from government:

Northrop Grumman 92%

Lockheed Martin 84%

General Dynamics 72%


1) A sigh of relief for British banks. Barclays and Royal Bank of Scotland are both up after a U.K. panel did not recommend structural reforms that would probably have required the banks to spit their investment banks from their retail operations.

2) BHP Billiton threw cold water on reports that it was considering a bid for Woodside Petroleum, an Australian gas producer. Separately, Credit Suisse upgraded the miner to outperform on attractive valuations and as it expects earnings strength from the rise in commodity prices.

3) NYSE Euronext stood by its strategic deal with the Deutsche Boerse and rejected the unsolicited bid from the Nasdaq and ICE, saying the Deutsche Boerse deal would create “more long-term value for shareholders and is significantly more likely to close.” Meanwhile, Nasdaq/ICE shot back saying the Deutsche Boerse transaction is “indisputably financially inferior.”

4) Tyco International rises 7 percent on a report that France’s Schneider Electric is considering a bid for the U.S.-based security services firm. Tyco was the most actively-traded stock pre-open.

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