Energy and Utilities Rebound Following Obama's Remarks

Jacob Harper |

Obama 2President Obama has taken tough actions against carbon emitting, going as far as to declare “war on coal.” Obama will be using a presidential memorandum to sidestep Congress and begin immediately enacting his plan, which aims to cut coal production, reduce carbon emissions, and inject $8 billion into renewable energy resources.

Obama's case was further bolstered when the Supreme Court agreed to hear a case that would bolster the Environmental Protection Agency's (EPA) ability to curb carbon emmissions from power plants.

Energy and utility companies fought this plan tooth and nail. While the plan still has a long way to go before implementation, investors were initially skittish on energy. The S&P 500 Energy Index lost 3.84 percent of its value last month.

Yet energy stocks, after suffering in preparation of the remarks, have actually seen a recent modest gain. Investors seem confident in energy and utilities to weather tighter restrictions and the move away from coal.

That is, should those changes even happen. Obama is utlizing executive branch powers to try to push the plan through quickly, and the plan is sure to be met with much resistance as it moves forward. And not just by energy companies, but by states that have hsitorically relied on coal as a major component of their economy. West Virginia Attorney General Patrick Morrissey, a Republican, said "This president's unprecedented use of the Environmental Protection Agency to enact overreaching regulations and circumvent state primacy has prompted our fellow Republican attorneys general to fight back at full force, and we plan to continue."

Coal company Peabody Energy (BTU) had dropped 17 percent since June 15. But Peabody has regained 1.68 percent to hit $15.10 a share.

Walter Energy (WLT), following a dip last week on the environmental news and word that the company wouldn’t refinance, rebounded and posted a big gain, rising 7.03 percent to hit $11.35 a share.

Utilities that fought the changes the hardest also bounced back. After experiencing a slide of almost 20 percent of its value over the last month, AES Corporation (AES) gained 2.63 percent to hit $11.71 a share. Southern Company (SO) had lost 10 percent since May and posted 1.72 percent gain to hit $43.68.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AES The AES Corporation 12.02 -0.09 -0.74 5,161,432
BTU Peabody Energy Corp n/a n/a n/a 0
DFRG Del Frisco\'s Restaurant Group Inc. 14.96 -0.27 -1.77 70,557
SO Southern Company (The) 51.05 -0.81 -1.56 6,110,793

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