Shares of Enphase Energy tested a buy point on Wednesday while Nextracker extended its breakout and First Solar popped to a fresh decade-plus high. The Invesco Solar ETF also rose but closed near session lows.
Cooling Inflation Raises Rate-Cut Hopes
Economic data on Wednesday morning highlighted slowing inflation, raising hopes for interest rate cuts — and lifting a big overhang on U.S. solar stocks and exchange traded funds. But shares of solar energy companies pared gains later in the session after the Fed signaled only one cut is coming this year.
On Monday, U.S. solar gained amid a report that the U.S. International Trade Commission voted to investigate whether Chinese solar panels routed from Southeast Asia are evading new tariffs and hurting domestic manufacturing.
Solar Stocks, TAN ETF Extend Rallies
First Solar stock gained 2.3% to 301.21 on the stock market today. Shares reached their highest level in more than 10 years intraday. Among other solar stocks, Nextracker , Enphase Energy and Sunrun made solid gains, but Array Technologies slipped a fraction. All are among the top 10 holdings in the Invesco Solar ETF.
On Wednesday, the Invesco Solar ETF trimmed gains to 0.8% at the close. It is still up nearly 5% on the week. The ETF remains down nearly 10% year to date despite a 75% surge for No. 1 holding FSLR stock. First Solar, Enphase Energy and Nextracker account for a third of its assets combined.
Inflation and rising interest rates roiled solar stocks over the past 18 months by making projects more difficult to finance. IBD's Energy-Solar industry group lost 28% in 2023, placing it among the worst performers within the 197 groups tracked by IBD.
But U.S.-based solar firms have been gaining momentum. 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.
First Solar Stock, NextTracker Stock, Enphase Stock
On May 22, a report declaring First Solar stock an AI winner boosted shares of the solar manufacturer. First Solar is now far extended from a 232 buy point cleared on that day, according to MarketSurge pattern recognition. That means shares are not in buy range.
On Wednesday, NextTracker stock advanced 2.3%. The IBD 50 stock topped a 58.49 cup-with-handle buy point on Monday and closed within the 5% chase zone on Wednesday after paring gains.
Enphase stock briefly seized a 139.65 buy point on Wednesday, but closed near the bottom of the day's range, up 1.6%. Its relative strength line has been moving sideways, a sign it's neither leading nor lagging the market.
Sunrun stock jumped 7% intraday, hitting its best levels since late February. But it ended the session up just 0.7%.
Array Technologies added 4.9% intraday but closed a penny lower. Array stock regained a falling 50-day moving average in recent sessions, but remains below the 200-day line.
With First Solar extended and laggards such as Array and Sunrun starting to rebound, investors could consider TAN ETF as a way to play solar stocks.
