Solar stocks shine after inflation reading bolsters rate-cut hopes

By Ciara Linnane

Data showing U.S. consumer prices falling for the first time in more than four years sparked a rally in interest-rate-sensitive industries

Solar stocks were sharply higher on Thursday, buoyed by a cooler-than-expected inflation reading that bolstered hopes the Federal Reserve will start lowering interest rates sooner rather than later.

Data showed U.S. consumer prices falling for the first time in more than four years, sparking a rally in interest-rate-sensitive industries, including home builders, utilities and solar-equipment makers.

"With both inflation and the labor market softening, the door now appears wide open for the Fed to begin cutting rates," said Brian Rose, Senior U.S. Economist, UBS Global Wealth Management.

Sunnova Energy International Inc. (NOVA) led the gainers with a 15.5% rise, followed by SunRun Inc. (RUN), up 13.4%.

SunPower Corp. (SPWR), which focuses on residential solar, was up 6% and Enphase Energy Inc. (ENPH), which makes solar micro-inverters, battery energy storage, and EV charging stations, was up 3.5%.

Fluence Energy Inc. (FLNC), which specializes in energy storage, was up 3.4%, while generator maker Generac Holdings Inc. (GNRC) was up 2.9% and First Solar Inc. (FSLR), which makes photovoltaic (PV) panels, was up 1.5%.

The Invesco Solar ETF TAN was up 3.6%.

The solar sector has been in a slump amid lower demand thanks to high interest rates, regulatory changes in California relating to rooftop incentives and rising inventories.

Also read: Solar stocks are rallying, with boosts from Tesla and China

BMO analysts said Thursday they expect the coming earnings season to find solar companies still struggling overall.

"We see residential solar demand as moribund overall but see more positive updates from both NOVA and RUN," they wrote in a note to clients.

-Ciara Linnane

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07-11-24 1458ET

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