Why solar energy stocks jumped on Tuesday

What happened

Shares of solar energy stocks had another good day on Tuesday, climbing on the back of a rising market and good news for the industry. The gains were widespread, but there were a few companies running the industry today.

SunPower (NASDAQ: SPWR) increased by 18.2%, JinkoSolar Holding (NYSE: JKS) was up 9.9% and Enphase Energy (NASDAQ: ENPH) jumped 7%, while developer Brookfield Renewable Partners (NYSE: BEP) increased by 5% at its peak. Shares were up 17%, 9.5%, 5.2% and 4.8% respectively at 3 p.m. EDT.

So what

The first company-specific news was about SunPower, whose price target was increased from $ 22 to $ 35 per share by Piper Sandler analyst Kashy Harrison. The company’s rating remains overweight, and the analyst believes President-elect Joe Biden’s energy plan may continue to fuel solar stocks in a long-term trend.

Treasury Secretary candidate Janet Yellen was also before Congress today, urging lawmakers to “act big” on an economic relief plan. Not only are these comments on the stimulus being applauded, but they seem to indicate that Yellen will push to keep interest rates extremely low for the foreseeable future, which would help keep funding for solar energy projects low.

A general trend over the past six months has been the rise in prices of solar power stocks, in the hopes that subsidies and stimulus payments will increase under a Biden administration and regulatory policy will be more favorable. This is the same trend that we are seeing today – except that this time the policies discussed are a little more concrete.

Now what

Days like today, the speculative market trend has taken over the solar industry and stocks are rising without much concrete information. There are no earnings reports or big contract signings that drive revenue growth and profitability. But sometimes big gains come on days when favorable winds drive stocks up.

What would interest me more are the policies that a Biden administration could put in place to help the solar industry. Yellen will be among those to help with policy making, but there are still many questions to be asked about how regulators will adjust policies to favor renewables – or whether they will push for more subsidies. Right now, the market believes the solar industry will be one of the biggest winners of the Biden presidency. Given the pressure to spend from the highest levels of government, it’s hard to say this won’t.