Wall Street was so enthusiastic Tuesday that even the merchant energy stocks rose. Promising news from a number of these beleaguered players sparked a sectorwide rally, reversing Monday's sharp selloff and leading to yet another session of double-digit percentage moves. Of course, with most of these stocks trading in the low single digits, it doesn't take much to get a 10% change, but investors who have seen 90% drops this year will take what they can get.
Cash-strapped Dynegy ( DYN) set the tone with premarket reassurance that its $1.8 billion pipeline sale to Warren Buffett's MidAmerican Energy should close by month's end. The transaction, expected to save Dynegy from a devastating cash crunch, has come under doubt recently due to liens placed on the pipeline by former owner Enron. Dynegy said it has submitted a proposal to federal regulators that could clear the way for the immediate sale of its Northern Natural Gas pipeline to Buffett's company. "Provided the proposed resolution is accepted by the Federal Energy Regulatory Commission, the companies expect to secure the necessary approvals and complete the transaction in August 2002, as originally planned," Dynegy and MidAmerican Energy announced Tuesday. Although FERC has yet to rule on the proposal, the market displayed confidence. Dynegy's stock soared 29.1% to $1.82 in midday trading.