After a three-day run higher, stock markets turned south on Friday. In early afternoon trading, the S&P 500, the Dow, and Nasdaq are all reading 3% lower...or worse.
If you have the bad fortune to own solar stocks today, you're getting hurt even more. As of 12:30 p.m. EDT, the stock of solar module maker Canadian Solar (NASDAQ:CSIQ) is down 10.5%. Shares of solar installers Vivint Solar (NYSE:VSLR) and Sunrun (NASDAQ:RUN) are down 11.4% and 12%, respectively. Panel producer and solar power plant developer SunPower (NASDAQ:SPWR) is hurting worst of all, down 13.8%.
There's no bad news relating to any of these four companies specifically. That being said, there are some pretty significant macroeconomic factors at work.
To cite just the most obvious, on Thursday, the U.S. Department of Labor reported 3.3 million new claims for unemployment benefits -- largely jobs lost to social distancing to combat the spread of COVID-19. At the same time, Johns Hopkins University is reporting that the U.S. now has more confirmed cases of COVID-19 than any other country: more than 86,000.
Combined, these figures create a clear and present danger of the U.S. economy slipping into recession.
And yes, the U.S. Senate on Thursday passed its $2 trillion economic stimulus plan. But as investment banker Roth Capital pointed out on Wednesday, the bill included no mention of an extension of federal investment tax credits that reduce the effective cost of installing residential and commercial solar power systems.
Thus, while it's possible that solar stocks such as Sunrun, Vivint, SunPower, and Canadian Solar will see some benefit from the bill (for example, there's a $500 billion fund for extending loans to commercial companies that need them), unless the House decides to add the solar subsidies that the Senate neglected to include, there seems to be little hope of an immediate lifeline being cast in solar stocks' direction.
Unsurprisingly, solar investors are disappointed by this news. And when you add in all the bad economic news on top of this, it's also no surprise to see solar stocks sinking today.