For the second day in a row, stock markets are surging, buoyed by positive news on the coronavirus front: two straight days of "effectively flat" COVID-19 mortalities in New York City, a slowing death rate in southern Europe, and a presidential pronouncement that there's "light at the end of the tunnel."
In early trading Tuesday as of 10:55 a.m. EDT, stock indices are broadly higher, up about 1% on the Dow and S&P 500. Solar stocks are doing even better than that, with solar inverter-maker SolarEdge (NASDAQ:SEDG) still up 5% after topping 11% earlier in the morning, and residential solar-installers Sunrun (NASDAQ:RUN) and Vivint Solar (NYSE:VSLR) still up 10% and 15.7%, respectively.
Why these three stocks in particular?
Certainly, the media's generally positive spin on the latest coronavirus numbers is helping these solar stocks, just as it's helping other stocks. The sooner we put the novel coronavirus crisis and the recession it's spawned behind us, the sooner things can get back to "normal" in the solar market. Workers can resume installing residential solar panels. Demand for electricity will revive as companies reopen their doors and restart their production lines, spurring additional investment by utility-scale solar farms.
Yesterday, investors seemed to be betting that the latter would happen first -- and perhaps rightly so. Companies presumably have more cash on hand and more access to government loans with which to resume solar construction than do residential homeowners. They've been stuck in quarantine and unable to earn a paycheck. But eventually, the residential solar market will come back, as well, and this could be why investors are shifting their focus to the residential installers today -- because they didn't go up as much yesterday.
At the same time, we're seeing a revival in oil prices as investors begin wondering if a more normal economy might drive more normalized demand for gasoline. Oil prices aren't rocketing, exactly, but WTI crude is up a respectable 1.1% in late afternoon trading, and Brent crude prices are up a small fraction of a percent.
Higher prices for oil naturally implies higher prices for companies providing alternatives to oil. While today's increase in the price of oil isn't a trend just yet, it might be the beginnings of one -- and that's what solar investors are betting on today.