Solar stocks sizzled Thursday after the latest data showed the inflation rate fell in June to its lowest level in more than three years, boosting rate-cut hopes. First Solar rose but hit resistance.
Sunrun, a home solar power company, surged to its highest level in a month. Nextracker jumped above a key level. Enphase Energy climbed, but came off highs.
Cooling Inflation Boosts Rate-Cut Hopes
Economic data on Wednesday morning showed that core inflation cooled more than expected last month.
The consumer price index fell 0.1% last month from May, taking the annual inflation rate down to 3%. Core CPI, which strips out volatile food and energy prices, clocked a 3.3% annual rate. Both came in lower than expected.
The soothing inflation data raised fresh hopes for Federal Reserve cuts to interest rates later this year — which would lift a big overhang on U.S. solar stocks and exchange traded funds.
Solar Stocks: First Solar, Sunrun, TAN ETF
First Solar stock gained 2.1% on the stock market today. Shares tried to get back above the 50-day moving average, but fell back.
Among other solar stocks, Enphase popped 4.6% on Thursday, also meeting 50-day resistance. Sunrun soared 15.5%, hitting a one-month high. Nextracker advanced 5.6%, also closing near session highs. Array Technologies and SolarEdge Technologies also climbed, below their 50-day lines and far below the 200-day.
Sunrun targets the home solar power market. Lower interest rates also are good news for new-home construction, which is key for residential solar. Homebuilder stocks scored big gains on Thursday, including this IBD Stock of the Day.
On Thursday, the Invesco Solar ETF climbed 4.7%. It is up 7.7% on the month but remains down nearly 19% so far this year. That is despite a 35.5% surge for No. 1 holding FSLR stock.
Inflation and rising interest rates roiled solar stocks in 2023 by making projects more difficult to finance. IBD's Energy-Solar industry group lost 28% last year, placing it among the worst performers within the 197 groups tracked by IBD.
U.S.-based solar firms have stabilized this year. In May, President Joe Biden hiked tariffs on solar cells imported from China to 50%, up from 25%. China has "used unfair practices to dominate upward of 80% to 90% of certain parts of the global solar supply chain," the Biden administration said.
But solar stocks could be volatile heading into the November presidential election. Solar ETFs, recently bruised by lower prices and higher borrowing costs, face another potentially serious threat.
Former President Donald Trump, a 2024 presidential candidate, could put clean energy tax credits under President Joe Biden's Inflation Reduction Act on the chopping block.
