US STOCKS-Wall St notches all-time highs on lingering rate-cut optimism

* Major indexes touch record highs
* Ford gains on joining forces with Volkswagen
* J&J weighs on healthcare stocks
* Indexes up: Dow 0.9%, S&P 500 0.5%, Nasdaq 0.6%

(Updates to close)
By April Joyner and Caroline Valetkevitch
NEW YORK, July 12 (Reuters) - All three major indexes posted
record closing highs on Friday as firm 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.
The S&P 500 closed above the 3,000 level for the first time,
with the industrial .SPLRCI , consumer discretionary .SPLRCD
and materials .SPLRCM sectors each posting gains of at least
1%.
In his two-day testimony before Congress, Fed 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."
"Clearly his messaging was far more directive in terms of
what the Fed is going to do at the next meeting than just a
vague promise to keep the economic expansion intact," said
Quincy Krosby, chief market strategist at Prudential Financial
in Newark, New Jersey. "That has brought the market to new
highs."
With expectations for rate cuts in place, the focus is
turning 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. Analysts 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 243.95 points,
or 0.9%, to 27,332.03, the S&P 500 .SPX gained 13.86 points,
or 0.46%, to 3,013.77 and the Nasdaq Composite .IXIC added
48.10 points, or 0.59%, to 8,244.14.
For the week, the S&P 500 rose 0.8%, the Dow added 1.5% and
the Nasdaq gained 1%.
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 4.1% 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 the S&P 500
healthcare index .SPXHC , whose 1.2% decline was the biggest
among S&P 500 sectors.
Illumina Inc ILMN.O shares tumbled 16.1%, 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
2.02-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favored advancers.
The S&P 500 posted 50 new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 83 new highs and 55 new lows.
Volume on U.S. exchanges was 5.68 billion shares, compared
to the 6.71 billion average for the full session over the last
20 trading days.