Why Shares of KBR, Inc. Are Rising 10% Today
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What happened
Shares of KBR, Inc. (NYSE: KBR), a global provider of professional services and technologies within the hydrocarbons and government services sectors, are up 11% today after Donald Trump's surprise victory and a reversal in oil prices.
So what
The markets are giving KBR a boost today for a couple of reasons. One is simply the belief that Trump might opt to increase government spending in the near term to make a splash and quickly ramp up economic activity -- even if it isn't a long-term strategy -- and KBR's business in the government services sector could benefit.
Another reason for KBR's surging stock price today is that oil prices reversed early losses and are also moving higher Wednesday. Two of KBR's business segments are technology and consulting, especially focused on oil and gas, and engineering and constructing including onshore oil and gas, oil refining and offshore oil and gas, among others. But it could be a short-lived phenomenon.
"The outcome of the U.S. election adds to the challenges for the oil exporters because it likely leads to weaker economic growth in an already fragile global economy," said Daniel Yergin, vice chairman of analysis firm IHS Markit, according to Reuters. "And that means additional pressure on oil demand."
Now what
The markets are painting a broad stroke over the certain industries today and rewarding companies that are seemingly poised to benefit from a Trump presidency, as well as the boost in oil prices Wednesday, but it's important to keep this in mind: Trump isn't going to be in office until January, and even then, we really have little clue to what exactly his policies will be and how quickly they will be executed.
While the election has provided a flash in the pan for many stocks, it's probably going to be more important for KBR investors to pay attention to the upcoming OPEC meeting and the impact that will have on oil prices.
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