Heres Why Arch Coal Incs Stock Popped and Then Faded

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Arch Coal Inc's stock was up nearly double digits at one point in the day before slipping to a mid-single-digit gain by mid-afternoon. The move was fueled by comments made by EPA Administrator Gina McCarthy as she hinted that the EPA might soften interim targets in a proposed rule for existing power plants.

So what: Electric utilities have complained that the proposed interim deadline for states to meet tougher carbon-emission standards are too tight. This, according to both electric utilities and regulators, could lead to a destabilization of electric supplies. Loosening the proposed targets could allow the lives of coal-burning plants to be extended, which would be a positive for coal companies like Arch Coal.

Now what: Coal has long been seen as enemy No. 1 in the climate-change battle. That's why the EPA has targeted coal under its Clean Power Plan, which envisions cutting power-plant emissions by 30% by 2030. However, the EPA is now seeing that its proposed goal might be too ambitious, as coal is still a vitally important fuel for U.S. utilities. By softening the deadline, it will give utilities more time to wean the country off of coal and on to less carbon-intense fuel supplies.

Still, while this delay could grant a little more time for U.S. power plants to burn coal, it's not going to ignite new demand for coal in America, which is what coal companies need right now. While the coal industry's outlook in America might have gotten a little less dim, it's still pretty dark.

The article Heres Why Arch Coal Incs Stock Popped and Then Faded originally appeared on Fool.com.

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Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.