Weak dollar and bumper company earnings drive Wall Street surge, lifting US equities to new highs and putting DJIA on track for sixth record close in a row
The Dow Jones Industrial Average has gone above the 22,000 mark for the first time, boosted by bumper company earnings and a weak dollar, with investors shrugging off the latest upheavals in the White House.
The move comes five months after the Dow passed the 21,000 level, having previously crossed 20,000 in January. This year it is up about 11%, and since the election of Donald Trump as US president in November, it has risen more than 20%. Meanwhile, the S&P 500 and Nasdaq Composite are also near record highs.
This latest Wall Street surge has been helped by forecast-beating results from Apple, which also pleased investors by dismissing suggestions its forthcoming iPhone 8 could be delayed. Apple shares jumped nearly 6% to a record $159 (120), before slipping back to $157 by lunchtime.
The Dow had added 0.2% to 22,007 by lunchtime after hitting a peak of 22,036 during the morning. It is still on track for another record close, the sixth in a row.
US markets have been buoyed for much of this year by hopes that President Trump would unveil tax reforms and infrastructure plans to boost the countrys economy. However, recently his plans to abolish the Obamacare healthcare system received a setback, casting doubt on his ability to push through the rest of his legislative programme. The threat of impeachment is also hovering in the background, while several key members of his team in the White House have resigned or been fired.
However, strong company results from the likes of Goldman Sachs, Boeing and Apple have kept investors buying despite the concerns over Trump. Two-thirds of the S&P 500 companies have reported quarterly results, for the three months to the end of June, and about 72% of them have beaten expectations.
Meanwhile, the dollar has weakened, partly on concerns over Trump and also because of the growing belief that the US Federal Reserve will not raise interest rates again in the immediate future with the economy showing signs of running out of steam.
Bob Doll, chief equity strategist at Nuveen Asset Management, told Bloomberg TV: Returns on [cash] are low, bonds are sitting there doing not much and earnings are coming through. So stocks are the story.
On Wednesday, new figures showed weaker than expected US jobs figures for July, with private sector employment rising by 178,000, rather than the 185,000 predicted by economists. On Friday, the official non-farm payroll numbers are forecast to show a 180,000 increase, down from Junes figure of 187,000.
The dip in the dollar which benefits US exporters pushed the pound to an 11-month high of $1.3245 against the US currency.
Michael Hewson, chief market analyst at CMC Markets UK, said: US investors have continued to turn a deaf ear to the ongoing political intrigue unfolding in Washington DC [and] for now the direction of travel continues to remain positive.
Share price jump of 40% in 2017 made founder worth $91bn for a short while leapfrogging the fortune of Microsoft founder Bill Gates
The founder of Amazon, Jeff Bezos briefly overtook Microsofts Bill Gates to become the worlds richest person.
Bezos leapfrogged Gates, who has been the richest man on the planet since 2013, after a rise in the share price of Amazon ahead of its latest results due Thursday night.
According to a real-time billionaires index compiled by Forbes, the rise pushed the value of Bezoss fortune to $91bn (69bn) compared with Gates wealth of $90bn. Their riches are calculated on the share prices of their respective companies and at the current values Bezoss stake is twice as big as carmaker Ford.
But the Amazon share price fell back leaving Gates on top, but with less than $1bn separating them.
Bezos born in Albuquerque, New Mexico, in 1964 keeps a relatively low profile, but has used some of the wealth he has amassed to buy the Washington Post and invest in space travel through Blue Origin, a company he founded in 2000.
He began Amazon in 1994 when he sold books from his garage in Seattle before expanding into a huge range of other products and capturing the global rush to online shopping.
Amazon now accounts for 43% of everything sold online in the US and 64 million people have signed up for its Prime service which gives access to free deliveries and video streaming. Amazon shares have soared this year making the company worth more than $500bn.
At the start of 2017, Bezos was ranked fourth-richest in the world, behind Gates, the investor Warren Buffett and Amancio Ortega, who founded Inditex, the company behind retailer Zara.
The share price rally comes despite accusations by Donald Trump, during the US election campaign, that Amazon was getting away with murder, tax-wise. He said Bezos was using the Washington Post for political influence.
Amazon floated on the stock market in 1997. Every year Bezos reprints the letter he sent to shareholders that year, insisting it is only Day 1 for the company and pledging to focus on the long-term and be the market leader.
He has not joined the club of billionaires who pledge to hand over the majority of fortunes to charity started by Gates and his wife, along with Buffett but recently tweeted to ask for philanthropic ideas to help in the short term, which he said was in contrast to his long-term approach to running the business.
I want much of my philanthropic activity to be helping people in the here and now short term at the intersection of urgent need and lasting impact.
Forbes started tracking billionaires in 1987 and Bezos is the seventh person to hold the title of the worlds richest person. In a report on his rise to the top of the rankings, Forbes said Bezos would not be at the top if Gates had not given so much of his wealth away and has calculated that Gates has been the richest person in the world for more than half the 30 years it had been watching the wealth of billionaires.
The closing share price of Amazon and Microsoft on Thursday will determine whether Bezos cements his position at the top of the league. Microsofts shares were down on Thursday.
Takeover of organic food specialist marks new push into grocery market after launch of Fresh delivery service
Amazon, the worlds most powerful online retailer, has taken a giant stride into traditional retailing, spending $13.7bn (10.7bn) to take over organic food chain Whole Foods Market.
The all-cash deal could be game-changing for the traditional supermarket business. Amazon has long had ambitions to move into the grocery business and launched its food delivery service, Fresh, in the US 10 years ago. It introduced the service in the UK last year after signing a wholesale deal with British supermarket Morrisons.
Amazon is the fourth biggest business in the US and accounts for 43% of online sales there. Whole Foods, founded in 1980, has about 460 stores, including nine in the UK where it has operated since 2004.
Walmarts shares dived 6%, wiping about $13bn off the value of the worlds biggest retailer as the deal ramped up pressure on traditional chains already hit by a rapid change in shopping habits. Shares in the UKs biggest chain, Tesco, and Germanys Metro were also down about 6% each.
This deal is potentially terrifying for other grocers, said Neil Saunders from retail analysis firm GlobalData. Although Amazon has been a looming threat to the grocery industry, the shadow it has cast has been pale and distant. Today that changed: Amazon has moved squarely onto the turf of traditional supermarkets and poses a much more significant threat.
Until now, Amazon has had a limited impact on the grocery market. In the US, it still only accounts for less than 0.5% of grocery spending, according to GlobalData.
Bryan Roberts, an analyst at TCC Global, said the deal with Whole Foods suggested that Amazon could now look to buy supermarket chains in its major markets which include the UK, France and Germany. He said: This is planting a huge flag that Amazon is incredibly serious about become a significant grocer.
Analysts at Bernstein suggested Morrisons and Sainsburys were possible targets in the UK alongside Ahold Delhaize in the Netherlands and Frances Carrefour.
But Roberts said Amazon already operated partnerships with a number of regional supermarkets in the US as well as Morrisons in the UK and would not necessarily need to buy them out in order to expand. He said the deal was likely to be focused on acquiring access to Whole Foods brands, supply chain and distribution network to power the growth of its Amazon Fresh delivery service.
Some analysts expressed surprise at the tie-up between Amazon, which has traditionally focused on cut-price deals, and the upmarket Whole Foods, which is nicknamed Whole Paycheck in the US. Roberts said the two firms customer bases were likely to overlap substantially.
Bezos said: Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades theyre doing an amazing job and we want that to continue.
John Mackey, the Whole Foods co-founder and chief executive, said: This partnership presents an opportunity to maximise value for Whole Foods Markets shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.
Mackey will remain as chief executive and Whole Foods headquarters will stay in Austin, Texas.
Mackeys 0.03% stake in the business, which is listed on the Nasdaq stock market in the US, is worth just over $41m. He is likely to retain a stake in the business.
Whole Foods has had a huge influence on food retail in the US, bringing organic and health foods to the mainstream. But recently growth has stalled.
In February, it announced it would close nine stores in the US after six quarters of decling sales in a row.
The deal with Amazon comes days after Mackey attacked the hedge fund Jana Partners, which had acquired a 9% stake in the retailer. He described Jana as greedy bastards that would have to knock Daddy out if it wanted to take over the company.
Mackey said the business had changed because the more conventional, mainstream supermarkets have upped their game. He added: The world is very different today than it was five years ago.
Amazons move into the grocery market will pile on the pressure for traditional supermarkets around the world which have been affected by shoppers switching to online, smaller local stores and discounters such as Aldi and Lidl.
Lidl is opening its first stores in the US this week as part of a plan to open about 100 by the middle of next year, while Aldi is in the middle of a $3bn-plus expansion plan to take its total number of US stores to 2,000 by the end of next year. In the UK, the traditional big four supermarkets Tesco, Sainsburys, Asda and Morrisons have all lost market share in recent years to the rapidly expanding German chains.
Clive Black, a retail analyst at Shore Capital, said: Amazon is clearly getting into offline as well as online. It is not going to spend nearly $14bn and then close nearly 500 stores. This is going to cause an awful stir in the US and some of those waves will lap into the UK and beyond.
A good fit? How they measure up
Roots Founded by Jeff Bezos in his Seattle garage in 1994. After spending a year building a website and sourcing stock, Amazon opens its virtual doors the following summer, billing itself as the Earths biggest book store with 1m books to choose from.
Annual sales $142.6bn
Head office Seattle
Blue sky thinking Bezos is pouring his billions into his private spaceflight company, Blue Origin, developing rockets capable of shuttling the paying public into space.
Roots College dropout John Mackey and his then girlfriend, Renee Lawson, scrape together $45,000 to open a natural foods store in Austin, Texas, in 1978. In 1980 they join forces with like-minded entrepreneurs Craig Weller and Mark Skiles to open the first Whole Foods Market.
Annual sales $15.9bn
Head office Austin, Texas
Blue sky thinking Mackey wrote Conscious Capitalism, which espouses a business philosophy that is good for suppliers, staff and communities as well as shareholders. A long-term vegan, he more recently co-wrote The Whole Foods Diet, which promotes the health benefits of veganism.