It's not just meme stocks that saw a resurgence this week.
Beaten-down clean energy stocks have rallied this week. The iShares Global Clean Energy exchange-traded fund, which tracks sectors from renewable electricity to semiconductors to solar energy, has gained roughly 3%. Plug Power shares have climbed 33%, Enphase Energy shares have gained 8% and NextEra Energy shares have added 4%.
Behind the rally? President Joe Biden is raising tariffs on $18 billion in Chinese imports across sectors including steel and aluminum, electric vehicles, solar cells and medical products. The new rates range from 100% on electric vehicles to 50% on solar components to 25% for the other sectors, reports CNN's Kayla Tausche.
"China can't be the only country that produces clean technology for the world we need," a senior Biden administration official said. "We need diversified, not concentrated, production of our most critical goods and technologies. … That's the kind of dynamic we think will produce resilient supply chains and clean technology."
Clean energy stocks were battered last year by supply chain snarls and sky-high interest rates, which drove up borrowing costs for growing companies trying to load up on capital. Hopes that an influx of US government spending on climate solutions would help revive the sector didn't pan out, either.
Higher rates also tend to make it more difficult for consumers to transition to using clean energy, since sources like a residential solar system can cost thousands of dollars and require a loan. While some investors hoped that the Federal Reserve would begin cutting rates this year, the central bank has continued to hold rates at a 23-year high.
Some investors warn that though the tariffs could continue boosting clean energy stocks, the recent rally isn't driven by just improving fundamentals. The surge is also in part due to traders' willingness to take on more risk in their portfolios as stocks continue notching record highs, they say.
"The investment thesis post-tariffs in the sector is better than it was before. But that doesn't mean that all these companies are out of the woods," Steve Sosnick, chief strategist at Interactive Brokers, told CNN.
Wall Street's large risk appetite was in full force this week. Shares of meme stocks such as GameStop and AMC Entertainment have swung wildly after the Roaring Kitty X account run by Keith Gill, a trader who helped spawn the 2021 meme stock frenzy, posted for the first time in three years. Meme stocks are shares of companies that tend to see wide swings based on their popularity on social media rather than their fundamentals.
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