Why Are Solar Stocks Down Today?

  • Solar stocks are down today on reports that President Joe Biden’s climate agenda is in peril.
  • Shares of solar companies initially rallied when the Biden administration’s budget was unveiled.
  • With midterm elections drawing closer, time is running out for Biden to secure funding for clean energy projects.
solar stocks - Why Are Solar Stocks Down Today?

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Solar stocks are down today on news that government spending on clean energy initiatives might be in jeopardy. The New York Times and other media outlets are reporting Senator Joe Manchin of West Virginia has informed fellow Democrats he will not support funding for climate or energy programs that could lead to increased taxes on wealthy Americans and corporations.

Manchin’s opposition could scuttle President Joe Biden’s plans to fund clean energy projects, of which solar panels are a big part. The news has pushed down the stocks of solar energy companies such as FirstSolar (NASDAQ:FSLR), Enphase (NASDAQ:ENPH) and Sunrun (NASDAQ:RUN), among others.

What Happened With Solar Stocks

In a meeting with Senate Majority Leader Chuck Schumer, Manchin said he would only support a package that includes lower prescription drug costs and an extension of Affordable Care Act subsidies that are set to expire by year’s end. Manchin’s rejection of funding for clean energy projects comes after weeks of negotiations aimed at winning his support.

This deals a major blow to Biden’s climate agenda that would have seen the federal government allocate nearly $45 billion for clean energy projects, which would have benefited solar power companies. Stocks such as FSLR, ENPH and RUN had rallied when the Biden administration first unveiled its budget.

President Biden has said he wants to cut U.S. emissions in half by 2030.

Why It Matters

Manchin, who is a conservative-leaning Democrat, is often viewed as tiebreaker in the evenly divided Senate. His opposition to funding clean energy projects hurts Biden’s efforts to lessen U.S. reliance on fossil fuels that are believed to cause climate change. With Democrats holding onto the Senate by a thin majority, Manchin has been able to exercise veto power over President Biden’s domestic policies and push his own agenda.

Recent polls show the upcoming midterm elections will be a tight race. Democrats could suffer substantial losses this fall, adding a sense of urgency to pass the budget while the party still controls the White House and both houses of Congress.

The situation could change dramatically after Americans go to the polls in a few months. Investors see the prospect of solar power companies benefiting from government spending as increasingly dim and are selling the stocks as a result.

What’s Next for Solar Stocks

Solar stocks are falling substantially on an otherwise up day for markets. Investors clearly see Senator Manchin’s rejection of funding for clean energy projects as bad news for FSLR, ENPH and RUN. With the midterm elections drawing closer, time is running out for President Biden’s climate agenda and the prospects of solar energy companies.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/why-are-solar-stocks-down-today/.

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