The global plunge in stock markets over the past three weeks has taken the wind out of the sails of clean-energy stocks, ending a powerful run that saw their value grow by some 40% in the year to mid-July.

The WilderHill New Energy Global Innovation Index (NEX), which tracks a number of companies around the world with strong interests in renewable energy, plateaued in July and then tumbled this month, along with the general stock markets. Some observers say that, for clean-energy stocks, this was an overdue correction.

The index has been hit hard by the market turmoil, says Michael Liebreich, chief executive of London-based New Energy Finance, which co-compiles the index with WilderShares of California. “It's taking a little bit of a beating,” he says, “but it's still ahead on the year.” The index started 2007 at 289 and hit 400 before retreating this month (see above).

The early summer had been particularly strong for US clean-energy companies, which had (and indeed still have) high hopes that the energy bill winding its way through Congress will provide fresh incentives for investment in wind and solar power. Rob Wilder, president of WilderShares, says that just before this month's general market slump, investors were betting that the bill would pass — and boost demand for renewable energy sources in the United States.

“We expect to see further turbulence and volatility,” says Liebreich, who has been warning for some months that the index was due to dip (see Nature 447, 17; doi:10.1038/447017b 2007). “But the fundamentals of the industry are very strong. In a way I actually welcome the correction.”