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US STOCKS-Nike and banks lift S&P 500 to record high close

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* Nike surges to record after strong profit forecast

* FedEx slips after missing 2022 earnings forecast

* Virgin Galactic soars on approval for space tourism (Updates end of session)

June 25 (Reuters) - The S&P 500 ended the week at record high on Friday, lifted by Nike and several banks, while weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve.

Nike Inc surged to an all-time high after the sneaker maker forecast fiscal full-year sales ahead of Wall Street estimates, helping the Dow lead among the three main indexes.

Bank of America and Wells Fargo rallied after the Fed announced big banks have cleared stress test and will no longer face pandemic-related restrictions on buying back stock and paying dividends.

The S&P 500 financials index was among the top performers among 11 sector indexes.

“Today is a bit of profit-taking in tech and a reallocation into the banks after the results of the stress tests,” said Dennis Dick, a proprietary trader at Bright Trading LLC, adding he expects banks to soon announce increased dividends.

A bipartisan Senate deal on infrastructure spending embraced by U.S. President Joe Biden on Thursday continued to lift stocks, with the materials and industrials indexes increasing and helping the S&P 500 outperform the Nasdaq.

“The positive news from the infrastructure package favors the S&P 500 more than then Nasdaq. The Nasdaq does not pour cement into roads and put steel in bridges. That’s the S&P 500,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

The latest personal consumption expenditures (PCE) data showed a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4% year-over-year as expected, above the Fed’s 2% flexible target.

Investors expected the session to be one of the busiest year as FTSE Russell reconstitutes its indexes following a wild trading year marked by the pandemic and a “meme” stocks.

Unofficially, the Dow Jones Industrial Average rose 0.71% to end at 34,438.58 points, while the S&P 500 gained 0.34% to 4,280.88.

The Nasdaq Composite dropped 0.06%, to 14,360.39.

FedEx Corp dropped after the U.S. delivery firm missed 2022 earnings forecast due to hiring difficulties.

CarMax Inc jumped after the used-car retailer topped Wall Street estimates for quarterly revenue, helped by strong demand as more people opted for personal vehicles over public transport due to the COVID-19 pandemic.

Billionaire Richard Branson’s spaceship company Virgin Galactic surged and was one of Wall Street’s most traded stocks after receiving approval from the U.S. aviation safety regulator to fly people to space.

Additional reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Maju Samuel and Aurora Ellis

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