Why Solar Energy Stocks Soared on Thursday

Solar energy stocks jumped double digits on Thursday after inflation data came in cooler than expected. The closely watched Consumer Price Index (CPI) fell 0.1% month over month in June after being flat in May. Prices were up just 3% over the past year.

Inflation is a key indicator investors watch to predict what the Federal Reserve is going to do with interest rates. High Inflation is what led to higher interest rates over the last two years and now that Inflation seems to be reversing. The Federal Reserve may reverse its interest rate policy to stimulate the economy as early as its September meeting.

Solar energy stocks, including SunPower (NASDAQ: SPWR), (NASDAQ: RUN), and Sunnova (NYSE: NOVA), reacted positively because interest rates are a key driver of the value they generate from long-term contracts to sell electricity to customers. Shares of SunPower were up as much as 10.5% on Thursday, Sunrun rose 14.2%, and Sunnova increased 17.6%. The stocks are up 6.5% 14%, and 16.8% respectively as of 3 p.m. ET.

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Source Fool.com