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* Illumina tumbles on weak preliminary rev estimate
* Altria rises on Goldman Sachs upgrade
* Ford gains on joining forces with Volkswagen
* Indexes up: Dow 0.51%, S&P 0.17%, Nasdaq 0.27% (Updates to open)
By Shreyashi Sanyal
July 12 (Reuters) - The S&P 500 and the Dow Jones Industrial Average hit record highs on Friday, as the indexes continued a strong run for the week on raised expectations of an interest rate cut this month.
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."
"He (Powell) has said everything he can, short of saying flat out that we are going to cut interest rates," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
"Fed fund futures were telling us for a month that was going to happen, but Powell has pretty much confirmed that's the case."
The S&P 500 index traded above the 3,000 level for the third straight session, also boosted by a 0.59% gain in the technology sector, the S&P 500's best performer so far this year. Apple Inc led the gainers.
The healthcare sector fell 1%, the most among the 11 major S&P sectors, weighed down by a 15% tumble in Illumina Inc. The gene sequencing company's preliminary second-quarter revenue came in below analysts' estimate.
At 10:05 a.m. ET, the Dow Jones Industrial Average was up 137.21 points, or 0.51%, at 27,225.29 and the S&P 500 was up 5.24 points, or 0.17%, at 3,005.15.
The Nasdaq Composite was up 21.82 points, or 0.27%, at 8,217.86.
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.
Second-quarter earnings season start 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.
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.
Producer price index (PPI) for final demand edged up 0.1% last month against a forecast of unchanged PPI, according to economists polled by Reuters.
Altria Group Inc rose 1.55% on a report that Goldman Sachs upgraded the Marlboro maker's stock to "buy" from "neutral."
Ford Motor Co rose 1.82% after the automaker and Volkswagen AG joined forces to develop autonomous and electric cars.
Advancing issues outnumbered decliners by a 1.61-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 31 new 52-week highs and two new lows, while the Nasdaq recorded 46 new highs and 21 new lows. (Additional reporting by Amy Caren Daniel and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila)