What Happened?

Shares of solar panel manufacturer First Solar (NASDAQ: FSLR) jumped 10.4% in the afternoon session after the U.S. Treasury Department and IRS released new guidance on clean energy tax credits that was more favorable than investors had feared, continuing a rally from the previous session. 

This move extends a surge from the previous trading session as investors reacted positively to the updated rules, which were less restrictive than many had anticipated. The guidance clarifies how solar and wind projects can qualify for valuable federal tax credits. For large utility-scale projects, a focus for First Solar, the rules now emphasize a "physical work test" to determine if a project has begun, largely replacing a previous provision. This development has cleared up policy uncertainties that weighed on the solar sector for over a year. In response to the favorable guidance, analysts at UBS designated First Solar as a top pick, citing the reduced policy risk and potential for significant earnings growth.

The shares closed the day at $219.32, up 9.7% from previous close.

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What Is The Market Telling Us

First Solar’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. But moves this big are rare even for First Solar and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock dropped 3.2% on the news that an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.

First Solar is up 17.5% since the beginning of the year, but at $219.05 per share, it is still trading 14.3% below its 52-week high of $255.75 from September 2024. Investors who bought $1,000 worth of First Solar’s shares 5 years ago would now be looking at an investment worth $2,944.

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