NEW YORK (Reuters) – U.S. stocks hit record highs on Friday as high expectations for an interest-rate cut from the Federal Reserve continued to propel shares while investors awaited next week’s kickoff of the corporate earnings season.

Numbers showing the rise of the Dow Jones Industrial Average above 27,000 are displayed on a screen above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., July 12, 2019. REUTERS/Lucas Jackson

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.”

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

With firm expectations for interest-rate cuts in place, the focus among several investors has turned to the corporate earnings season as large U.S. banks, including Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N), are set to report next week.

“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 see ourselves 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 to Refinitiv 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, or 0.33%, to 3,009.9 and the Nasdaq Composite .IXIC added 40.05 points, or 0.49%, to 8,236.09.

Data for U.S. producer prices in June showed the smallest annual increase in producer inflation in nearly 2-1/2 years and a slowdown in underlying producer prices, which suggested that overall inflation could remain moderate for a while.

Ford Motor Co (F.N) shares gained 2.65% after the automaker and Volkswagen AG (VOWG_p.DE) said they would join forces to develop autonomous and electric cars.

Johnson & Johnson (JNJ.N) shares slid 4.3% after Bloomberg reported that the U.S. Justice Department is pursuing a criminal probe into whether the healthcare conglomerate lied about potential cancer risks of its talcum powder.

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

Illumina Inc (ILMN.O) shares tumbled 15.7%, the most among S&P 500 companies, after the gene sequencing company’s preliminary second-quarter revenue came in below analyst estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.92-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 Shreyashi Sanyal and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila, Shounak Dasgupta and Jonathan Oatis

Our Standards:The Thomson Reuters Trust Principles.

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