Stock Market Today: Stocks Struggle for Direction on Inflation Concerns

Stocks were choppy in light trading Wednesday as worries about inflation resurfaced and new home sales plunged. 

Inflation remained in focus early in the session after Australia followed Canada by posting hotter-than-expected consumer price data. Market participants are hoping the readings don't portend bad things for the highlight of this week's economic calendar: the May Personal Consumption and Expenditures (PCE) Price Index. Also known as the Fed's preferred inflation gauge, this is where the central bank sets its long-term target of 2%.

In other macro news, real estate weakness persists. The annualized pace of new home sales fell 11.3% month-over-month in May to 619,000, the Census Bureau reported. Total sales fell well short of analysts' estimate for 636,000. 

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"New home sales reflect the pressure that lofty mortgage rates and tighter credit conditions have on the real estate sector," writes José Torres, senior economist at Interactive Brokers. "On a year-over-year basis, the pace of national new home sales fell 16.5%. Meanwhile, the median home sales price and inventory increased month-over-month."

Stocks on the move

FedEx (FDX) stock surged nearly 16% after the logistics giant beat top- and bottom-line expectations for its fiscal 2024 fourth quarter and issued an outlook for fiscal 2025 that was in-line with analysts' expectations.

"There's a lot of good stuff happening at FedEx right now, in our view, and provided management can stay on track, we continue to like the opportunity here," said Stifel analyst J. Bruce Chan (Buy).

Southwest Airlines (LUV) stock gapped lower by more than 4% at the open after the airline cut its second-quarter revenue guidance. Southwest is now calling for revenue per available seat mile to decline 4% to 4.5%, compared with its previous outlook for a drop of 1.5% to 3.5%. By session's end, however, LUV stock was off just 0.2%.

Today's news comes just weeks after activist investor Elliott Investment Management revealed a $2 billion stake in Southwest. Elliott plans to engage with the management team of Southwest to push for changes to reverse the airline's recent underperformance, and it may have more ammunition following the Q2 guidance shift.

Meanwhile, in great news for shareholders in beleaguered Rivian (RIVN), the stock soared more than 23% after the EV maker announced a partnership with Volkswagen. The deal includes a total investment of $5 billion by Volkswagen and the formation of a joint venture to accelerate the development of software for both automakers.

Under the terms of the agreement, Volkswagen will make an initial investment of $1 billion in Rivian through an unsecured convertible note. Volkswagen will invest an additional $1 billion in both 2025 and 2026. The German automaker will also make an extra $2 billion investment in 2026 as part of a joint venture that will "create next-generation software-defined vehicle (SDV) platforms to be used in both companies' future electric vehicles."

Wedbush analyst Daniel Ives (Outperform, the equivalent of a Buy) called this "a core game changer for Rivian" that changes not only the company's capital structure but also the Street's view at a critical time. 

At the closing bell, the blue-chip Dow Jones Industrial Average was essentially unchanged at 39,127 (+0.04%). The broader S&P 500 rallied late in the day to finish up less than 0.2% at 5,477, while the tech-heavy Nasdaq Composite once again led all comers, rising 0.5% to end at 17,805.

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