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

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* Illumina tumbles on weak preliminary revenue estimate
* Altria rises on Goldman Sachs upgrade
* Ford gains on joining forces with Volkswagen
* Indexes up: Dow 0.49%, S&P 0.19%, Nasdaq 0.28%

(Updates prices, changes comments)
By Shreyashi Sanyal
July 12 (Reuters) - The S&P 500 and the Dow Jones Industrial
Average hit fresh record highs on Friday, as the indexes
continued a strong run for the week on hopes of an interest rate
cut this month, while investors waited for the start of the
corporate earnings season.
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".
"My belief on why the Fed will likely lower rates in the
July meeting is that it will try to assume its responsibilities
as the central bank for the world and global economic indicators
are not as healthy as in the U.S.," said James Abate, chief
investment officer at Centre Asset Management in New York.
Abate said most of the positive catalysts that have driven
the market higher, have been priced in and now the focus will
shift to the earnings season in the next few weeks.
The second quarter earnings season starts 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.
Results from transport companies next week will also help
investors gauge the impact of the trade war on the
transportation sector, which is considered as a barometer of
U.S. economic health.
The S&P 500 .SPX traded above the 3,000 level for the
third straight session, also boosted by a 0.44% gain in the
technology sector .SPLRCT , the S&P 500's best performer so far
this year. Apple Inc AAPL.O led the gainers.
The healthcare sector .SPXHC fell 1.02%, the most among
the 11 major S&P sectors, weighed down by a 15.11% tumble in
Illumina Inc ILMN.O . The gene sequencing company's preliminary
second-quarter revenue came in below analysts' estimates.
The Dow .DJI was up 132.90 points, or 0.49%, at 27,220.98
and the S&P 500 was up 5.73 points, or 0.19%, at 3,005.64.
The Nasdaq Composite .IXIC was up 22.94 points, or 0.28%,
at 8,218.98.
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. Altria Group Inc MO.N rose 1.30% on a report that Goldman
Sachs upgraded the Marlboro maker's stock to "buy" from
"neutral".
Ford Motor Co F.N gained 2% after the automaker and
Volkswagen AG VOWG_p.DE joined forces to develop autonomous
and electric cars. 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.
Advancing issues outnumbered decliners for a 1.59-to-1 ratio
on the NYSE and a 1.61-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and two new
lows, while the Nasdaq recorded 58 new highs and 29 new lows.