President Donald Trump touted "BEAUTIFUL, CLEAN COAL" in a social media post late Monday as his administration aims to prop up its falling share of U.S. energy production. Coal stocks like Peabody Energy and Core Natural Resources are rallying on Tuesday as the S&P 500 backslides after a two-day bounce.
Yet makers of heavy-duty trucks and parts, including Oshkosh and S&P 500 members makers Paccar and Cummins are feeling the downside of Trump's deregulation, leading to analyst earnings cuts and a downgrade on Tuesday.
Trump EPA Boosts Coal
Last Wednesday, in keeping with Trump's Jan. 20 executive order to unleash American energy, the Environmental Protection Agency announced it will revise wastewater regulations issued last year for coal burning power plants. The rules required coal plants to use the most effective pollution control technology for preventing the discharge of arsenic, mercury and selenium to protect drinking water.
Stronger standards released last year for limiting soot pollution from coal-fired power plants, which has been found to increase infant mortality and asthma severity, also are on the chopping block.
Those actions are part of a dramatic shift of environmental policy, "reconsidering the regulations that have restricted every sector of the economy," EPA Administrator Lee Zeldin wrote in a Wall Street Journal op-ed. "This isn't about abandoning environmental protection — it's about achieving it through innovation and not strangulation."
Trump posted on Monday that China had gained "tremendous Economic advantage over us by opening up hundreds of all Coal Fire Power Plants," while "Environment Extremists" had fought coal in the U.S. "I am authorizing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL."
Yet it's not clear what other specific policies Trump contemplates to boost coal or whether they would lead to more investment in coal, given regulatory uncertainty beyond 2029. In 2023, coal generated about 16% of the electricity used in the U.S., while natural gas generated 43%.
EPA Truck Emissions Rule
On the same day, the EPA said it would revamp greenhouse gas emission rules approved last March that would have increased adoption of pricier electric vehicles by the heavy-duty trucking industry starting in 2027. The Institute of Energy Research had estimated that 60% of new medium-duty trucks and 25% of heavy-duty trucks would be electric vehicles by 2032 under last year's rule.
The American Trucking Associations praised the EPA for providing relief, saying the rule was "unachievable given the state of battery-electric technology and the sheer lack of charging infrastructure."
Downgrade, Earnings Cut For Truck Builders
Yet industry analysts had anticipated a surge of orders into 2026 to get ahead of the 2027 emissions rules. Now there's no rush.
On Tuesday, UBS downgrade Paccar to neutral from buy, cutting its price target to 108 from 124. Analyst Steven Fisher highlighted uncertainty around tariffs and regulations, while noting that Paccar rivals depend more on Mexico as a base of production.
JPMorgan analysts cut price targets and lowered earnings estimates for Oshkosh and Paccar, citing weak truck orders and the EPA deregulation move. The firm now expects 2025 production of heavy-duty trucks to fall 10%, revised down from 5% growth. Medium-duty truck production is seen down 20% vs. a prior forecast of -15%.
JPMorgan cut its Oshkosh target to 127 from 117, while cutting Paccar's target to 121 from 132 and Cummins' to 375 from 420. JPMorgan still has an overweight rating on PCAR.
Coal, Trucks, S&P 500
After Trump's social media post, Peabody Energy popped 3.7% and Core Natural Resources 3.4% in Tuesday stock market action, building on last week's gains. But, but shares are still down about 55% and 45%, respectively, from November's peak.
Core Natural Resources was created by the August 2024 merger of Consol Energy and Arch Resources.
PCAR slipped 1.5%, Cummins 1.5% and Oshkosh 2%.
The S&P 500 is off 1.2% in Tuesday afternoon trade. On Monday, the S&P 500 rallied 0.6%, finishing 7.6% below its all-time high on Feb. 19.
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