S&P 500, Dow hit new highs on rate cut optimism
By Shreyashi Sanyal
July 12 (Reuters) - The S&P 500 and the Dow Jones Industrial Average hit record highs on Friday, as the indexes continued a strong run for the week on raised expectations of an interest rate cut this month.
In his two-day testimony before Congress, Federal Reserve Chairman Jerome Powell said the U.S. economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war and that the central bank stood ready to "act as appropriate."
"Fed fund futures were telling us for a month that was going to happen, but Powell has pretty much confirmed that's the case."
The S&P 500 index traded above the 3,000 level for the third straight session, also boosted by a 0.59% gain in the technology sector , the S&P 500's best performer so far this year. Apple Inc led the gainers.
The healthcare sector fell 1%, the most among the 11 major S&P sectors, weighed down by a 15% tumble in Illumina Inc . The gene sequencing company's preliminary second-quarter revenue came in below analysts' estimate.
At 10:05 a.m. ET, the Dow Jones Industrial Average was up 137.21 points, or 0.51%, at 27,225.29 and the S&P 500 was up 5.24 points, or 0.17%, at 3,005.15.
The Nasdaq Composite was up 21.82 points, or 0.27%, at 8,217.86.
Keeping investors on edge was Beijing's threat to impose sanctions on U.S. firms that sell arms to Taiwan after Washington approved possible sales of $2.2 billion in tanks, missiles and related equipment.
Second-quarter earnings season start next week against the backdrop of warnings of the U.S.-China trade war hurting corporate profits. S&P 500 companies are expected to report a 0.4% dip in profits from a year earlier, according to Refinitiv IBES data.
A Labor Department report showed U.S. producer prices rose slightly in June, leading to the smallest annual increase in producer 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 to economists polled by Reuters.
Altria Group Inc rose 1.55% on a report that Goldman Sachs upgraded the Marlboro maker's stock to "buy" from "neutral."
Ford Motor Co rose 1.82% after the automaker and Volkswagen AG VOWG_p.DE joined forces to develop autonomous and electric cars.
Advancing issues outnumbered decliners by a 1.61-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 31 new 52-week highs and two new lows, while the Nasdaq recorded 46 new highs and 21 new lows.