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ETFs to Play the Jobs Bill

The legislation should boost spending on road and bridge construction, and this could help ETFs that focus on raw materials and industrials.

NEW YORK (TheStreet) -- In an attempt to ignite the labor markets, Congress Wednesday passed a $17.6 billion measure and sent it to President Obama to sign into law.

With unemployment lingering around 9.7%, spring break right around the corner and congressional elections looming at the end of the year, the clock was ticking, and lawmakers decided to agree on the legislation.

The bill is expected to exempt businesses from paying the 6.2% payroll tax on newly hired employees who have been jobless for at least 60 days and offers a $1,000 tax credit to businesses who keep the newly hired workers employed for at least a full year.

In addition, the bill provides extra funding, through subsidized state and local construction bonds, to shore up road and bridge construction and extend the federal highway program through the end of the year. This could lead to an increase in domestic demand for raw materials such as steel, industrials and transportation services related to getting these materials to desired destinations.

With this in mind, some possible investment opportunities include:


Market Vectors Steel ETF

(SLX) - Get VanEck Vectors Steel ETF Report

, which includes global steel giant

Arcelor Mittal

(MT) - Get ArcelorMittal SA ADR Report

and diversified metals and mining company


(VALE) - Get Vale S.A. Sponsored ADR Report

. SLX closed at $66.29 on Wednesday.


iShares Dow Jones US Industrials

(IYJ) - Get iShares U.S. Industrials ETF Report

, which holds diversified industrial conglomerate

General Electric

(GE) - Get General Electric Company (GE) Report

and equipment giant


(CAT) - Get Caterpillar Inc. Report

. Historically, both of these companies have reaped the benefits of increased government infrastructure spending. IYJ closed at $57.89 on Wednesday.


TheStreet Recommends

PowerShares Dynamic Building & Construction

(PKB) - Get Invesco Dynamic Building & Construction ETF Report

, which holds engineering and construction firms

URS Corporation



Flour Corporation

(FLR) - Get Fluor Corporation Report

. Both are known for providing infrastructure related services. PKB closed at $12.64 on Wednesday.


iShares Dow Jones Transportation Average

(IYT) - Get iShares Transportation Average ETF Report

, which holds rail transportation services giant

Union Pacific Corporation


and freight transportation services company

CH Robinson Worldwide

(CHRW) - Get C.H. Robinson Worldwide, Inc. Report

. Both of these companies could indirectly reap the benefits of increased demand for materials and industrials. After all, these goods have to be transported. IYT closed at $79.34 on Wednesday.

Although an opportunity could present itself as a result of the approval of this recent legislation, a significant uptick in demand may not necessarily be the end result, and for this reason, among others, the aforementioned ETFs carry risk.

A good way to mitigate these risks is through the implementation of an exit strategy with triggers at price points at which an upward trend could potentially be coming to an end.

According to the latest data at

, an upward trend in the aforementioned ETFs could come to an end at the following price points: SLX at $62.15; IYJ at $55.96; PKB at $11.19; IYT at $76.23. These price points change on a daily basis as market conditions fluctuate, and updated data can be found at

-- Written by Kevin Grewal in Laguna Niguel, Calif.

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.