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James River Coal tumbles as energy stocks ebb

NEW YORK (MarketWatch) -- Energy stocks fell back Tuesday, surrendering earlier gains, as coal shares continued their slide after a bankruptcy filing from Patriot Coal Corp., with James River Coal Co. trading down more than 20%.

On the up side, Duke Energy Corp. (DUK) recovered some of its recent losses with a 1% gain as the company's chief-executive switch remained in the spotlight.

At the closing bell, Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) moved down by 0.7% and 0.6% respectively.. The two oil majors are components of the 30-stock Dow Jones Industrial Average (DJIA) , which dropped 83 points.

Among energy-sector equity benchmarks, the NYSE Arca Natural Gas Index (XNG) moved down by 2.3% and the Philadelphia Oil Service Index (OSX) lost 2%, while the NYSE Arca Oil Index (XOI) shed 1.2%.

The Energy Select Sector SPDR Fund(XLE) , which tracks energy stocks in the S&P 500 index (SPX) declined by 1.6%. S&P component Chesapeake Energy Corp. (CHK) lost 6.5% and Denbury Resources(DNR) lost 5.4%.

Coal stocks fall into the red

Coal stocks fell back into the red after initial gains earlier in the day, on the heels of a bankruptcy filing by Patriot Coal. See story about Patriot Coal.

Analysts at Houston-based energy research firm Tudor Pickering Holt said clients should "proceed with caution" because the coal segment faces headwinds from heavy operating leverage, but it listed CONSOL Energy(CNX) as the least risky name in this regard.

Alpha Natural Resources(ANR) fell 6.1%, Consol Energy dipped 2.3% and Peabody Energy Corp. (BTU) dropped 3.7%.

Outside the S&P 500, Arch Coal Inc. (ACI) dropped 8.4% as shares of James River Coal (JRCC) fell 25% to $2.16. Walter Energy(WLT) dropped 4.3%.

Separately, analysts at Howard Weil terminated coverage of Patriot Coal because of the company's Chapter 11 bankruptcy.

Duke Energy CEO schedule to testify

Also Tuesday, analysts at Bernstein Research reiterated their outperform rating on Charlotte-based Duke Energy despite questions surrounding the surprise ouster of Bill Johnson as chief executive.

"We expect Duke to face a months-long legal and regulatory quagmire during which its stock price will be materially discounted," said Bernstein analysts, who added the company's shares would be "attractively priced" below $63. Shares of Duke Energy rose 1.3% to $66.14 on Tuesday.

"We doubt that Duke's board would have replaced Johnson and assumed the consequent legal risks, without a compelling and legally defensible reason," Bernstein analysts said. "If so, the drop in Duke's stock price could make the stock of interest to investors."

Duke Energy CEO Jim Rogers told the North Carolina Utilities Commission that the board had doubts about Johnson as the merger deal approached closure and that directors asked him to lead the company.

Separately, Roy Cooper, the state's attorney general, has launched an investigation into the leadership change.

Norwegian government averts Statoil production cut

U.S.-listed shares of Statoil ASA(STO) rose 0.1% after the Norwegian government stepped in to avert the shutdown of 1.2 million barrels of oil production a day.

The state-owned oil company had planned to turn off its oil spigot on the Norwegian continental shelf because of a deadlock over contract talks with its workers.