Shares of Fluor Corp., the largest engineering and construction services company, fell 14% on Wednesday amid concern that federal caps on electricity prices will blunt power plant construction.
The Aliso Viejo company's stock dropped $7.07 to close at $45 a share on the New York Stock Exchange after sliding earlier in the day to $44.96.
Shares of other major utility construction companies, including Jacobs Engineering Group Inc. in Pasadena and Shaw Group Inc. in Baton Rouge, La., also fell. Jacobs lost $5.36 to $62.51, and Shaw lost $4.90 to $37.10, both on the NYSE.
Stock prices in the industry began falling Tuesday when the Federal Energy Regulatory Commission instituted controls on soaring power prices in California and 10 other Western states. The surge in electricity prices in California has left the state's two publicly traded utilities insolvent.
"Even the ones that don't have substantial power exposure are coming under pressure," said John Rogers, an analyst with D.A. Davidson & Co. in Lake Oswego, Ore.
Fluor builds power plants through a joint venture with Duke Energy Corp. in Charlotte, N.C., the nation's largest utility owner. Duke and other power generators have been accused of price gouging during California's power crisis.
Fluor wasn't aware of any announcements that could account for its stock price decline, spokesman Keith Karpe said. Officials at Jacobs weren't available for comment. A Shaw spokesman said the company had put out no announcement that would have prompted the stock price decline.
Investors had hoped construction companies would benefit from a boom in power plant construction needed to address the shortage of electric generation in California and elsewhere, analysts said. "The trend is still quite positive over the next few years," said Michael Dudas, an analyst with Bear, Stearns & Co.
Shaw Group also fell amid speculation about accounting problems, said Stewart Sharf, an equities analyst with Standard & Poor's Corp.
"There are no accounting irregularities," Shaw Chief Financial Officer Robert Belk said in an interview. He said he had "no idea" what prompted the speculation.
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Fallout From Falling Energy Prices?
Fluor stock plunged 14% on Wednesday and Jacobs Engineering shares dropped 8% on concerns that their work building power plants may slow as the government imposes price caps on energy.