Congress failed to pass a $1 trillion-plus coronavirus relief package Monday, and investors reacted negatively. Congress has a second chance to get this right today, and House Speaker Nancy Pelosi says a deal to pump as much as $2 trillion into the American economy could be "done in the next few hours."
Investors are taking a deal as a foregone conclusion, and as of 1 p.m. EDT, the S&P 500 is already up 7.76% in response to the not-yet-news.
Solar stocks in particular are benefiting from the surge of optimism about a deal. Shares of solar power inverter maker SolarEdge (NASDAQ:SEDG), for example, have leapt 20.7%. Residential solar installer Vivint Solar (NYSE:VSLR) is up 14.8%, while panel maker and commercial solar plant builder SunPower (NASDAQ:SPWR) has gained 8%.
Why these three solar stocks in particular?
There doesn't seem to be any obvious answer to that question, as none of the three has made any announcements today, nor have Wall Street analysts published any new opinions labeling any one of them a buy or a sell (or a hold, either, for that matter). That doesn't mean that the bidding up of solar stocks is entirely unreasonable, however.
For one thing, if we assume that a financial stimulus bill does eventually work its way through Congress, that would be generally stimulative to the U.S. economy. There also appears to be some Congressional support for adding tax credits to the stimulus package that would specifically benefit renewable energy companies.
At the same time this is happening, the oil market appears to be stabilizing today, with the price of WTI crude oil down only slightly from Monday -- and the price of Brent crude up. If you consider that alternative energy sources such as solar are alternatives to oil, then the more expensive oil is, the greater the demand for solar power, which would be another plus for investing in solar stocks.
Now, whether these two positives add up to an argument for SolarEdge stock, for example, being worth 20% more today than it was worth yesterday is certainly debatable. That the situation has gotten at least modestly better for solar stocks today, however, is beyond dispute.