Why Peabody Energy Stock Jumped 15% This Week

President Donald Trump just did something no one saw coming, sending shares of Peabody Energy (NYSE: BTU) rallying 15% at their highest point in trading this week. Although the stock cooled off a bit on Friday, it was still up 9% up for the week through 11 a.m. ET Friday.

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The massive catalyst that rocked the coal stock

In an Oval Office announcement on June 4 , Trump invoked the Defense Production Act (DPA) -- a 1950 law that grants the president authority to influence domestic industries related to national security – to boost the coal industry.

The Trump administration announced hundreds of millions of dollars in funding to "build, upgrade, and modernize coal-powered infrastructure." The plan includes $350 million for commissioning two new coal-fired plants, recommissioning a plant shut down in 2024, and modernizing another plant.

The U.S. Department of Energy (DOE) had earlier committed $175 million to upgrade six existing coal facilities. Last year, the department announced $500 million in funding to support 13 coal plants, which could save enough coal-fired capacity to power 14 million homes in America. In total, at least 42 coal mines that may have been shut will remain operational under the Trump administration.

Long story short, the U.S. government is aggressively pivoting back to fossil fuels, including coal in a bid to expand to grid capacity and reliability while lowering energy costs to meet the booming demand for power, especially from artificial intelligence (AI) data centers and electrification.

It's a massive tailwind for Peabody Energy, the largest coal producer in the U.S., which is why its shares surged after the announcement. Peabody Energy owns the largest coal mine in the world, the North Antelope Rochelle Mine in Wyoming. It dug up 65 million tons of coal in 2025 .

What does this mean for Peabody Energy?

Peabody Energy filed for bankruptcy in 2016 amid ill-timed acquisitions, burgeoning debt, and slumping coal demand. Within a year, it restructured, emerged from bankruptcy, and has since focused on maintaining low costs, digging up whatever it could from existing mines, and pivoting from thermal coal to metallurgical coal, which is mainly used in steelmaking.

Between 2010 and 2025, coal production fell 50%, according to recent research from The Motley Fool. The government's infusion should change that story, as it signals longer lifespans for existing coal plants and higher potential demand and revenue visibility for coal giants like Peabody Energy.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.