Solar stocks took off like a rocket on Wednesday afternoon following news that Chinese officials would spend at least $2.1 billion to support the struggling industry. The Market Vectors Solar Energy ETF (NYSE:KWT) shot up nearly 9 percent, while the Guggenheim Solar ETF (NYSE:TAN) soared over 10.5 percent.
Any good news out of the solar industry comes as a surprise to many investors and observers who have seen little over the years but growing over-capacity and collapsing prices that drove hundreds of companies out of business. While American solar manufacturer First Solar, Inc. (NASDAQ:FSLR) has rallied for six months, most Chinese solar stocks have had a negative trajectory.
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Suntech Power Holdings Co. Ltd. (NYSE:STP) has fallen over 61 percent this year to date, and an 11 percent surge on Wednesday has the stock trading over $1 for the first time since the beginning of November. Trina Solar Limited (NYSE:TSL) gained over 17 percent in afternoon trading on Wednesday, after falling over 52 percent this year to date.
A report from the Solar Energy Industries Association is likely adding fuel to the fire. The report revealed tremendous strength in the solar industry for the third quarter, indicating that installations in the U.S. market grew 44 percent year over year, and the fourth quarter is expected to do even better…