US STOCKS-Wall Street hits new highs on rate-cut optimism

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* Major indexes touch record highs

* Ford gains on joining forces with Volkswagen

* J&J weighs on healthcare stocks

By April Joyner

NEW YORK, July 12 (Reuters) - U.S. stocks hit record highson Friday as high expectations for an interest-rate cut from theFederal Reserve continued to propel shares while investorsawaited next week's kickoff of the corporate earnings season.

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."

The S&P 500 .SPX traded above the 3,000 level for a thirdstraight session, with industrial .SPLRCI and consumerdiscretionary .SPLRCD posting gains of 1% or more.

With firm expectations for interest-rate cuts in place, thefocus among several investors has turned to the corporateearnings season as large U.S. banks, including Citigroup IncC.N and JPMorgan Chase & CoJPM.N , are set to report nextweek. urn:newsml:reuters.com:*:nL2N24A18L

"All this week has been the Federal Reserve's influence,"said Mark Kepner, equity trader at Themis Trading in Chatham,New Jersey. "At the position we're at here, we could seeourselves declining a bit if earnings are not that good."

Analysts currently estimate that S&P 500 companies will report a 0.4% dip in second-quarter earnings, according toRefinitiv IBES data.

The Dow Jones Industrial Average .DJI rose 191.72 points,or 0.71%, to 27,279.8, the S&P 500 .SPX gained 9.99 points, or0.33%, to 3,009.9 and the Nasdaq Composite .IXIC added 40.05points, or 0.49%, to 8,236.09.

Data for U.S. producer prices in June showed the smallestannual increase in producer inflation in nearly 2-1/2 years anda slowdown in underlying producer prices, which suggested thatoverall inflation could remain moderate for a while. urn:newsml:reuters.com:*:nL2N24C1HN

Ford Motor CoF.N shares gained 2.65% after the automakerand Volkswagen AGVOWG_p.DE said they would join forces todevelop autonomous and electric cars. urn:newsml:reuters.com:*:nL8N24D385

Johnson & JohnsonJNJ.N shares slid 4.3% after Bloombergreported that the U.S. Justice Department is pursuing a criminalprobe into whether the healthcare conglomerate lied aboutpotential cancer risks of its talcum powder. urn:newsml:reuters.com:*:nL4N24D3HS

Johnson & Johnson's slide dragged down healthcare shares,whose 1.3% decline was the biggest among S&P 500 sectors.

Illumina IncILMN.O shares tumbled 15.7%, the most amongS&P 500 companies, after the gene sequencing company'spreliminary second-quarter revenue came in below analystestimates. urn:newsml:reuters.com:*:nL4N24D2L0

Advancing issues outnumbered declining ones on the NYSE by a1.92-to-1 ratio; on Nasdaq, a 1.74-to-1 ratio favored advancers.

The S&P 500 posted 46 new 52-week highs and two new lows;the Nasdaq Composite recorded 76 new highs and 40 new lows. (Reporting by April Joyner; Additional reporting by ShreyashiSanyal and Manas Mishra in Bengaluru; Editing by SrirajKalluvila, Shounak Dasgupta and Jonathan Oatis) ((April.Joyner@thomsonreuters.com; +1 646 223 7480; ReutersMessaging: april.joyner.thomsonreuters.com@reuters.net; Twitter:@aprjoy))

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

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