US STOCKS-S&P 500, Dow hit new highs on rate cut optimism

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US STOCKS-S&P 500, Dow hit new highs on rate cut optimism

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* Illumina tumbles on weak preliminary rev estimate

* Altria rises on Goldman Sachs upgrade

* Indexes up: Dow 0.51%, S&P 0.17%, Nasdaq 0.27% (Updates to open)

By Shreyashi Sanyal

July 12 (Reuters) - The S&P 500 and the Dow Jones IndustrialAverage hit record highs on Friday, as the indexes continued astrong run for the week on raised expectations of an interestrate cut this 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 forthe third straight session, also boosted by a 0.59% gain in thetechnology sector .SPLRCT , the S&P 500's best performer so farthis year. Apple IncAAPL.O led the gainers.

The healthcare sector .SPXHC fell 1%, the most among the11 major S&P sectors, weighed down by a 15% tumble in IlluminaInc ILMN.O . The gene sequencing company's preliminarysecond-quarter revenue came in below analysts' estimate. urn:newsml:reuters.com:*:nL4N24D2L0

At 10:05 a.m. ET, the Dow Jones Industrial Average .DJI was up 137.21 points, or 0.51%, at 27,225.29 and the S&P 500 .SPX was up 5.24 points, or 0.17%, at 3,005.15.

The Nasdaq Composite .IXIC was up 21.82 points, or 0.27%,at 8,217.86.

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

Second-quarter earnings season start next week against thebackdrop of warnings of the U.S.-China trade war hurtingcorporate profits. S&P 500 companies are expected to report a0.4% dip in profits from a year earlier, according to RefinitivIBES 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:*:nL2N24C1HN

Altria Group IncMO.N rose 1.55% on a report that GoldmanSachs upgraded the Marlboro maker's stock to "buy" from"neutral."

Ford Motor CoF.N rose 1.82% after the automaker andVolkswagen AG VOWG_p.DE joined forces to develop autonomousand electric cars. urn:newsml:reuters.com:*:nL8N24D385

Advancing issues outnumbered decliners by a 1.61-to-1 ratioon 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 newlows, while the Nasdaq recorded 46 new highs and 21 new lows. (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))

This article appears in: Politics , Stocks , World Markets , US Markets
Referenced Symbols: AAPL ,

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