Dow & S&P 500 hit record highs after $35B Whole Foods buyout

Written by by Staff Writer, CNN The Dow and S&P 500 hit record highs Tuesday following a $35 billion deal to buy upscale grocer Whole Foods. Tesla’s surging stock also powered the big day…

Dow & S&P 500 hit record highs after $35B Whole Foods buyout

Written by by Staff Writer, CNN

The Dow and S&P 500 hit record highs Tuesday following a $35 billion deal to buy upscale grocer Whole Foods. Tesla’s surging stock also powered the big day for Wall Street.

The Dow rose 152 points, or 0.6%, to 25,550. The S&P 500 gained 0.8% and the Nasdaq gained 1%.

The stock market was in a funk earlier this month after a string of weak economic data signaled that the U.S. economy was slowing. Corporate profits are also down compared to last year and are expected to drop again in the second quarter.

But bullish traders had hoped that a strong July employment report would convince investors that the economy is still strong enough to withstand a Fed hike next month.

Tuesday’s report from the Labor Department was bullish indeed. The US economy added 223,000 jobs in July, a strong figure but below forecasts.

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The unexpectedly strong number is likely to push the U.S. Federal Reserve to continue raising interest rates, which could ignite inflation.

The Fed has hiked rates three times this year, but traders think the central bank is likely to deliver four rate hikes by the end of 2018.

“The job market’s strength continues to surprise to the upside and this is good news for the Fed to pursue its path of interest rate hikes,” David Kelly, the chief global strategist at JPMorgan Funds, said in a note to clients.

That’s good news for U.S. stocks, which have already rallied more than 10% this year. The major indexes are at or near record highs.

But investors are starting to worry that a few high-profile companies could drop the ball. Apple shares fell 1% on Tuesday after the company reported a big drop in iPhone sales and missed analysts’ profit forecast.

And Amazon shares slipped 1.5% after the e-commerce giant unveiled a new one-hour delivery service as it looks to ramp up competition with FedEx and UPS.

The Dow has been moving closely in tandem with Apple recently. Apple makes up about 5% of the index, which closed at a record high Tuesday.

Tuesday’s rally also had a particular boost from Tesla.

Tesla’s stock shot up 9.8% after reports surfaced that Saudi Arabia has stepped up its stake in the electric car company to as much as $20 billion. That’s in addition to the $1 billion deposit for a 5% stake the company made with Saudi Arabia’s Public Investment Fund last week.

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