Shares of renewable energy stocks had a great Thursday after plummeting double digits on Wednesday. Once again, the election is driving the market's reaction but the sentiment has reversed course today.
The biggest movers were solar stocks JinkoSolar (NYSE:JKS), which jumped as much as 24.6%, and Enphase Energy (NASDAQ:ENPH), which popped as much as 14.5%. Shares of the two stocks were up 24.3% and 14.5%, respectively, at 11:30 a.m. EST. Fuel cell companies Bloom Energy (NYSE:BE) and Plug Power (NASDAQ:PLUG) were up as much as 13% and 11.4%, respectively, and are now up 12.8% and 7.9%.
Wednesday's move was driven by the election but it wasn't the top of the ticket that renewable energy investors were concerned about. It was the assumption that Democrats would lose their bid to win the Senate, which would make even a Biden administration less effective in pushing renewable energy policies.
The political picture hasn't changed today as ballots are counted across the country. But even if the Senate remains Republican, as it has been for the last four years, there are policy changes that can be made that would favor renewable energy. Tariffs can be reduced, policies favoring coal can be pulled back, and the regulatory agencies will be more favorable to renewable energy overall.
A Democratic administration may be more favorable to renewable energy but let's not forget that solar, wind, and fuel cells have grown in the U.S. over the last four years under a Republican administration. So, no matter what happens, there's momentum behind the industry.
I wrote that investors shouldn't be too concerned about the short-term moves around the election because it's ultimately fundamentals that are going to drive solar stocks. That still holds today, and shares of renewable energy stocks are simply recovering from yesterday's losses.
Sometimes, the best thing we can do as investors is nothing. Panic selling yesterday based on election results would have resulted in missing the bounce in renewable energy stocks today, and we don't know ahead of time when bounces like this will happen. But long-term politics and elections aren't going to drive solar energy of fuel cells -- instead, they'll need to be financially competitive with fossil fuels to be big winners for investors. As that happens, it's a reason to be bullish on the industry but don't let a day or two around the election change your energy thesis for the next decade.