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REFILE-US STOCKS-Wall Street set to open higher on rate cut optimism


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* Banks gain as yields rise

* Illumina tumbles on weak preliminary revenue estimate

* Futures up: Dow 0.30%, S&P 0.22%, Nasdaq 0.20%

By Shreyashi Sanyal

July 12 (Reuters) - Wall Street looked set to open higher onFriday, putting the three indexes on track to extend this week'sstrong run fueled by rising expectations of an interest rate cutthis month.

In his two-day testimony before Congress, Federal ReserveChairman Jerome Powell said the U.S. economy was still underthreat from disappointing factory activity, tame inflation and asimmering trade war and that the central bank stood ready to"act as appropriate."

"He (Powell) has said everything he can, short of sayingflat out that we are going to cut interest rates," said RandyFrederick, vice president of trading and derivatives for CharlesSchwab in Austin, Texas.

"Fed fund futures were telling us for a month that was goingto happen, but Powell has pretty much confirmed that's thecase."

The S&P 500 index .SPX traded above the 3,000 level for asecond day in a row on Thursday, with stronger-than-expectedU.S. inflation data failing to shake expectations of a rate cut.

Keeping investors on edge was Beijing's threat to imposesanctions on U.S. firms that sell arms to Taiwan afterWashington approved possible sales of $2.2 billion in tanks,missiles and related equipment. urn:newsml:reuters.com:*:nB9N23B01W

In the latest evidence that the U.S.-China trade dispute wasimpacting growth, data showed that China's exports fell in Juneand imports shrank more than expected. urn:newsml:reuters.com:*:nL4N24D20L

U.S. Treasury yields ticked higher, extending Thursday'sgains after an auction of $16 billion 30-year bonds saw weakdemand. US/

Morgan StanleyMS.N , JPMorgan Chase & CoJPM.N , GoldmanSachs GroupGS.N rose between 0.5% and 1.4% in premarkettrading. The shares were also boosted after Citigroup raisedprice targets for the lenders ahead of earnings next week.

At 8:43 a.m. ET, Dow e-minis 1YMcv1 were up 81 points, or0.3%. S&P 500 e-minis EScv1 were up 6.75 points, or 0.22%, andNasdaq 100 e-minis NQcv1 were up 15.5 points, or 0.2%.

Second-quarter earnings season start next week against thebackdrop of warnings of the trade war hurting corporate profits.S&P 500 companies are expected to report a 0.4% dip in profitsfrom a year earlier, according to Refinitiv IBES data.

A Labor Department report showed U.S. producer prices roseslightly in June, leading to the smallest annual increase inproducer inflation in nearly 2-1/2 years.

Producer price index (PPI) for final demand edged up 0.1%last month against a forecast of unchanged PPI, according toeconomists polled by Reuters. urn:newsml:reuters.com:*:nLNSCIEF71

Among other stocks, gene sequencing company Illumina IncILMN.O tumbled 14.7% after its preliminary second-quarterrevenue came in below estimates. urn:newsml:reuters.com:*:nL4N24D2L0

Altria Group IncMO.N rose 1.5% on a report that GoldmanSachs upgraded the Marlboro maker's stock to "buy" from"neutral."

Ford Motor CoF.N rose 0.8% after the automaker andVolkswagen AG VOWG_p.DE joined forces to develop autonomousand electric cars. urn:newsml:reuters.com:*:nL8N24D385 (Additional reporting by Amy Caren Daniel and Manas Mishra inBengaluru; Editing by Sriraj Kalluvila) ((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780 ;Reuters Messaging:Shreyashi.Sanyal.thomsonreuters.com@reuters.net))






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