Stocks hit records on hopes of lower interest rates

NEW YORK

The major U.S. stock indexes closed at record highs on Friday, with the S&P 500 ending above 3,000 for the first time. The market was driven higher by technology, consumerdiscretionary, and industrial-company stocks, which more than offset the drop in drugmakers.

Investors continued to remain focused on the Federal Reserve. The Fed is expected to cut its benchmark interest rate this month for the first time in more than a decade to help counter slowing economic growth caused by trade disputes. Investors have bet heavily that the Fed is moving in that direction, moving stock and bond yields higher in the last two weeks.

Bond yields have been moving higher for several days, a sign that investors have become more confident that the U.S. economy will continue to produce growth, at least for the next several months.

The Dow closed up

243.95 points (0.9%) to 27,332.03. The S&P 500 rose 13.86 (0.5%) to 3,013.77, and the Nasdaq composite index rose 48.10 (0.6%) to 8,244.14. All three indexes closed at record highs. The Russell 2000 index of smaller-company stocks added 12.08 (0.8%) to 1,570.00.

Healthcare stocks took some of the heaviest losses. Eli Lilly, Merck, and Pfizer all fell more than 1%. Pharmaceutical companies also fell on Thursday after the White House withdrew a plan to overhaul the rebates that drugmakers pay insurers and distributors. Investors now expect drugmakers might come under renewed pressure to lower prices.

Separately, another drugmaker, Johnson & Johnson, fell 4.1%. Bloomberg News reported that the company, a Dow component, is under a criminal investigation for possibly lying to the public about the cancer risks found in its baby powder.

Investors are preparing for the start of secondquarter earnings season. Major U.S. banks will start reporting their results on Monday, starting with Citigroup. JPMorgan Chase, Wells Fargo, and Goldman Sachs will report their results on Tuesday.

There was positive economic data out of Europe on Friday. Industrial production rose by 0.9% in May, much more than the 0.2% gain that was predicted.