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Debt ceiling talks, NRG, Crocs: Stocks trending after the closing bell

Yahoo Finance Live anchors Diane King Hall and Seana Smith highlight the outlook for the ongoing debt limit negotiations, Elliott Management's stake in NRG Energy, and Crocs' stock performance.

Video transcript

SEANA SMITH: Let's get a quick look at some of the bigger stories of the day. And certainly, investors are on edge as they do await for President Biden's expected meeting with congressional leaders tomorrow. Now, markets are coming off two straight weeks of declines. But Diane, like Keith Lerner did just tell us earlier in the program, he does think a deal could be a catalyst here for stocks to break out of that tight trading range and to the upside. The number that he was looking at was 4,200, which has actually been a resistance level.

DIANA KING HALL: Yeah, it has been a resistance level. And it will likely continue to be a resistance level, especially when you have this debt ceiling overhang. And he juxtaposed it with what we saw historically. We went through this before in 2011 and the challenges that caused for the market and the US credit rating, if you will.

So hopefully we don't get to that level. There's been a lot of political maneuvering and brinksmanship with regard to the debt ceiling. So that is certainly something that could help the market break out, honestly, one way or the other, what happens. So that's certainly something that we've seen that's putting some pressure on the market or, again, to your point, keeping us in a narrow range.

SEANA SMITH: Yeah, it's been keeping us in a narrow range. I think everyone's just trying to figure out what exactly the next couple of weeks look like. Up until now, investors have largely been brushing off the fact that we don't have a deal done in Washington. That certainly has not been priced into the market yet.


SEANA SMITH: If we don't get a deal soon, certainly a number of research analysts have come out over the last week or so saying, as we get closer and closer to that X date, this is no surprise. Markets will start to react to the risk of a default. So we could certainly see volatility enter the action, re-enter the action if we don't get a deal soon.

DIANA KING HALL: Indeed. And we're seeing shares of NRG closing the day higher. And this is on news it is facing activist pressure. We talked about this a little earlier today. Elliott Management disclosing a position in the power company for the second time in six years. Now, Elliott wants a boardroom overhaul and a strategic overhaul. So this point that we talked about with regard to some activist investor action, we talked about Shake Shack as well within that context.

SEANA SMITH: Yeah Shake Shack's within the mix here. When it comes to NRG Energy and what we're seeing there, we know that when Eliott management enters the room-- this is what we have been told from numerous guests in the past. Everyone straightens up and listens to what they have to say. So NRG Energy closing up just about 3% today.

In terms of the activist investor activity over the last 12, 14 months and even looking at what we've seen so far this year, it has certainly been off to a strong start. More and more activist investors are targeting companies because of their underperformance, because of their cheaper valuations. And it's not just some of these smaller companies.

You're looking at NRG Energy. And then you also have Disney, Salesforce, some of the activist campaigns that they have faced over the last several months here. But when you take a look at the numbers, Q1 activist campaigns, 36% were initiated at companies that had also been targeted by other activists in recent periods. So certainly just points to the fact that they're under a tremendous amount of pressure from a number of investors.

DIANA KING HALL: Indeed, yeah. And Elliott saying they didn't like a move that NRG made for agreeing to buy a home tech company. That's Vivint Smart Home. They didn't like that move.

SEANA SMITH: Yeah, a lot of times they tried to shake up the board. It's just one of the things that Elliott is pushing for here.

All right, let's take a look at Crocs because shares jumping on a note from Baird, calling the stock a fresh pick for 2023 and also saying that the company can meet or exceed guidance this year. We know that Crocs has been a name here in focus over the last several months. It did get some momentum here.

Certainly during the pandemic, it was a pandemic favorite. You're looking at gains of just about 2 and 1/2 percent. Baird thinks a lot of people are going to be heading out to the stores and buying some Crocs soon.

DIANA KING HALL: I guess so. I mean, but they needed this win. I guess to them, a win is a win because recently they faced some pressure. They were a pandemic darling. But then they saw issues with regard to Hey Dude. The sales weren't as strong as expected there.

But the stock has not been in favor as much. I mean, in terms of the Wall Street popularity contest, it lost some of its luster. So you're looking at that downward trend that they had. And it's kind of starting to come to a lateral move. So they definitely needed this win today.

SEANA SMITH: Yeah, they did. And you're looking at losses of almost 6% here over the last three months, Diane.