4 Mutual Funds To Buy As U.S. Business Spending Surges

Business spending on capital goods in the United States witnessed a surge in April. Per the latest data from the U.S. Department of Commerce, new orders for capital goods made within the shores of the United States, increased in April from March. Such a rebound indicates improvement in demand for these goods. Further, factory orders also touched a 45-year high in May.

The Republican tax overhaul policy and steadily rising oil prices have resulted in increased business spending. Interestingly, the Trump administration has hinted at a fresh round of tax cuts prior to the midterm election to be held in November.

Investors looking to make the most out of such circumstances should bet on mutual funds invested in capital-intensive sectors.

Increased Capital Equipment Orders Boost Business Spending

On a year-over-year basis, core capital goods orders surged 6.6% last month, beating the market estimate of 0.7% growth. Excluding civilian aircraft and machinery, growth in equipment orders were broad-based. Such growth was achieved on the back of increased orders for electrical equipment, metals, and computers.

Further, orders for defense capital goods ticked up 3.1% last month. Excluding aircraft, non-military capital goods orders increased 1% month over month against a decline of 0.9% in March. Also, shipments of core capital goods were up 0.8%, while it fell 0.7% in March.

Finally, orders for appliances, electrical equipment, and components increased 2.6%, outshining the 2.4% growth achieved in March. Electronic products and computers orders were also up 1.1%, on a month-over-month basis.

Factors Supporting the Growth in Business Spending

President Trump’s landmark $1.5 trillion Tax Cuts and Jobs Act has largely resulted in increased business spending, particularly on capital and durable goods. Moreover, provision for additional tax holiday to U.S. corporations on repatriated profits held abroad has assisted in improving the liquidity of American firms.

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