Infrastructure-related companies were the big winners and drug stocks were the biggest losers after President Donald Trump's State of the Union address.
Other winners from Tuesday night's speech include defense stocks and the broader stock market.
Trump called for a bipartisan push for infrastructure projects and for lower drug prices.
"Both parties should be able to unite for a great rebuilding of America's crumbling infrastructure," Trump said. "I know that Congress is eager to pass an infrastructure bill, and I am eager to work with you on legislation to deliver new and important infrastructure investment."
"This is not an option. This is a necessity," Trump added. During his presidential campaign, Trump called for spending $1.5 trillion over a decade for infrastructure projects, but major funding has not been forthcoming.
Wall Street strategists said ahead of the speech that stocks like Vulcan Materials, Jacobs Engineering and Fluor Corp could get a boost if Trump pushed for greater infrastructure spending.
However, the odds of a big infrastructure-spending bill being approved by both chambers of Congress are still considered slim. Unless "President Trump specifically backs raising the gasoline or corporate tax rate, it is unlikely to see an agreement on a large deal," Dan Clifton, head of policy research at Strategas Research Partners, wrote in a note.
Drug stocks
Trump also pressured drug companies to lower medicine prices, stating it is "unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place."
"I am asking Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients," Trump added. "We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs way down."
If the government passes legislation that makes drug companies lower their prices, shares of Merck and Pfizer, as well as related companies like CVS Health and UnitedHealth, could be under pressure, strategists warned.
Merck and Pfizer were slightly in the red Wednesday morning; United Health was up slightly.
Trump's remarks on drug pricing came after the administration proposed a ban on so-called backdoor deals cut by pharmaceutical companies with middlemen who get preferred status for their drugs through Medicare.
Right now, drug companies pay rebates to pharmacy benefit management companies like CVS Health to include their medications on Medicare Part D plans. The Trump administration's proposal would leave PBMs receiving just a flat fee for including drugs on those plans. It would also pass approximately $29 billion in drug-company rebates to consumers.
Defense stocks
Two other winners from Tuesday night may very well be defense stocks and the broader stock market.
Trump boasted about the $716 billion set for military spending in 2019 and the $700 billion spent last year. He also said the U.S. secured a $100 billion increase in spending from NATO allies, adding the U.S. "will outspend and out-innovate all others by far."
"Boasting about the current funding for defense spending and taking credit for additional contributions from allies, President Trump set a hawkish tone for continued robust levels of defense spending," said Ed Mills, public policy analyst at Raymond James.
Increased defense spending could boost shares of Lockheed Martin and Raytheon, two of the major defense contractors in the U.S. Shares of Lockheed and Raytheon were flat Wednesday morning.
Softened wall rhetoric
The broader market is also a winner from the speech as Trump slightly changed his tone around the U.S.-Mexico border. Trump also did not mention the possibility of declaring a national emergency to build the border wall.
"There was no talk of using commander-in-chief military powers to build the wall, for instance," said Paul Donovan, chief economist at UBS Global Wealth Management. "That might be considered a win for investors, who prefer it when things do not escalate."