Published on 10 Jan 2022 on Oilprice.com via Yahoo Finance

Why Are Renewables Stocks Plunging?

Back in 2013, an announcement by the Federal Reserve about pulling back on the central bank's easy-money policies sent markets into a tizzy. Treasury bond yields skyrocketed, junk bond prices fell, emerging-markets stocks tumbled, and stock volatility was off the charts leading to the coining of a new phrase on Wall Street, "taper tantrum." Investors were expecting a similar scenario after the Fed met at its annual gathering at Jackson Hole in August to discuss tapering of asset purchases.

But alas, the market appears to be taking everything in its stride this time around, with no signs of a violent taper-tantrum in sight. The concept of an end to purchases now appears less frightening to investors after living through the Fed not only slowing down asset purchases but actually reducing the size of its holdings sheet in 2018 and 2019.

But the fact that short-term interest rates have not gone up by much does not mean that all is well. An expensive stock market trading near record highs compounded with a looming threat of higher interest rates is leading to investors increasingly shunning growth stocks in favor of more defensive value companies.