Energy stocks were most higher Monday, as investors weighed the potential burden of an Environmental Protection Agency finding that declares greenhouse gases a hazard to human health and advances the push for regulation.
The endangerment finding threatens the energy industry's big polluters, such as refiners and coal-based utilities, while power companies with a greener portfolio and solar parts and panel makers could gain from stricter regulation, analysts said.
Shares of utilities edged up across the board. Companies that have made considerable shifts toward energy efficient practices saw larger gains following the EPA's news. Shares of Exelon Corp. rose 86 cents to $50.16.
Meanwhile, stocks of power companies heavily reliant on coal were mostly flat. Jefferies & Co. analyst Paul Fremont said EPA regulations remain undefined and too far into the future to drive significant trading Monday. Shares of Duke Energy rose 24 cents to $17.38.
Oil and gas stocks were mixed, as oil prices slid and natural gas prices rebounded considerably as cold winter weather pushed up demand for the abundant resource.
Benchmark crude for January delivery fell 2 percent, or $1.54, to settle at $73.93 on the New York Mercantile Exchange, the lowest level in about two months. Natural gas jumped 38.5 cents, or 8.4 percent, to settle at $4.971 per 1,000 cubic feet.
Converging commodity prices drove oil and gas stocks, while the EPA news remained at the sidelines, said Raymond James analyst Cory Garcia.
"(The EPA finding) is not positive for the (oil and gas) space," said Garcia. "We're still waiting to see what comes of it. Regulation will be the determining factor."
Exxon Mobil Corp. shares fell 48 cents to $73.77. ConocoPhillips shares rose 16 cents to $50.82.
Meanwhile, solar stocks soared across the board, driven by stabilizing panel and polysilicon prices, rising expectations for strong demand from Asia and a better supply-and-demand balance, said Caris & Co. analyst Benedict Pang.
These elements, along with near-term earnings estimates, are the primary drivers in the solar sector, Pang said.
The EPA findings and subsequent regulations won't impact the sector until after 2010, he added.
Shares of the nation's largest solar panel maker, First Solar Inc., rose $5.56, or 4.3 percent, to $135.18.