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Monday's Energy Stocks: Markets up on Yellen's optimism; merchants buoy sector

Wall Street kicked off the week on the positive side of the ledger after Federal Reserve Chair Janet Yellen expressed optimism in the U.S. job market, which is stronger than it has been in almost a decade. The Dow Jones Industrial Average increased 0.20% to 19,883.06, and the S&P 500 grew 0.20% to 2,262.53.

Power producers kept energy stocks afloat, posting the biggest gains in the sector for the day on Monday, Dec. 19. Debt restructuring, higher natural gas prices and retail growth are key catalysts helping to improve analyst sentiment around independent power producers entering 2017, marking a nascent reversal on merchant names after a year of tumult. The SNL Merchant Generator Index advanced 1.38% to 81.63 while the SNL Energy Index edged up 0.20% to 279.58.

Outperformers included NRG Energy Inc. which saw a 4.47% rise in above-average volume to close at $12.85, after its successful conversion of four coal-fired facilities to run on natural gas. The modified units can collectively produce 2,780 MW, enough to power more than 2 million average homes. Following NRG's lead, 8point3 Energy Partners LP gained 3.85% on below-average volume to finish at $12.94 and Covanta Holding Corp. earned 3.26% in strong trading to end at $15.85.

Shares of Vivint Solar Inc. rose 3.45% in below-average trading to settle at $3.00, following the appointment of David Bywater as president and CEO on a permanent basis. He has served as the company's interim CEO since May 2.

Vectren Corp. ticked up 0.04% in about average volume to $52.40, after announcing that its electric utility will replace 715 MW of existing coal and gas capacity with solar generation and an 889-MW combined-cycle plant under an integrated resource plan.

Meanwhile, ALLETE Inc. retreated 0.84% on heavy volume to close at $63.86 after initiating 2017 earnings guidance in a range of $3.10 per share to $3.50 per share on net income of $155 million to $175 million. For 2016, the company expects earnings of $3.10 per share to $3.40 per share.

Among midstream players, Memorial Production Partners ebbed 5.84% on light volume to 45 cents after extending its forbearance agreements with its senior note holders for the second time. The agreements are now set to expire Jan. 13, 2017. Meanwhile, Ferrellgas Partners LP advanced 3.76% in slightly higher-than-average volume to $6.90 and Tallgrass Energy GP LP gave up 3.01% in average trading to $25.10. The SNL Midstream Energy Index declined 0.12% to 118.23.

The coal sector failed to recover from losses in trading on Friday, Dec. 16, and the SNL Coal Index lost another 1.11% to 79.61. Among components, Natural Resource Partners LP shed 4.80% to $34.70 and Rhino Resource Partners LP dropped 1.04% to $4.52, both in light trading. Arch Coal Inc., however, climbed 1.05% on weak volume to settle at $79.83 after receiving U.S. Forest Service approval for the expansion of its West Elk mine in Colorado.

Following a seesaw session that saw the front-month contract move between $3.330/MMBtu and $3.450/MMBtu, January 2017 natural gas futures ended the day slightly lower. The contract settled the day at $3.392/MMBtu, down 2.3 cents, after losing a collective 39.4 cents in the prior six sessions.

Market prices and index values are current as of the time of publication and are subject to change.