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

NEW YORK — 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, consumer discretionary and materials 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 and JPMorgan Chase & Co, 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 rose 243.95 points, or 0.9%, to 27,332.03, the S&P 500 gained 13.86 points, or 0.46%, to 3,013.77 and the Nasdaq Composite 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.

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