July 11, 2019 / 1:14 PM / 3 months ago

US STOCKS-Wall St set to open higher after rally on Powell's dovish remarks

* Insurers rise on report drug rebate proposal dropped

* Delta Air Lines gains on strong qtrly profit, lifts rivals

* CPI rises by most in nearly 1-1/2 years in June

* Fed’s Powell to resume two-day testimony at 10:00 a.m. ET

* Futures rise: Dow 0.32%, S&P 0.15%, Nasdaq 0.12% (Adds comment, details; Updates prices)

By Medha Singh

July 11 (Reuters) - U.S. stocks were set to open higher on Thursday, with healthcare shares in focus, a day after Wall Street’s main indexes touched new highs as comments from Federal Reserve chairman Jerome Powell cemented the case for an interest rate cut this month.

Stock futures pared some gains after a Labor Department report showed U.S. underlying consumer prices increased by the most in nearly 1-1/2 years in June.

The consumer price index (CPI), excluding the volatile food and energy components, rose 0.3% in June. The overall CPI edged up 0.1%, in line with May’s rise, compared with expectations of the index remaining unchanged.

“It’s a little higher than we thought but it seems like it’s going to take a lot more than a monthly data point to push Powell away from his dovish stance,” said Mike Loewengart, vice president, investment strategy at E*TRADE Financial Corp.

“The Fed has pretty much made it clear that the negatives of a cooling economy and ongoing trade tensions outweigh the positives of a Goldilocks inflation number and last week’s solid jobs read.”

In his first day of testimony before the Congress, Powell said the U.S. economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war. His two-day testimony resumes at 10:00 a.m. ET on Thursday.

Hopes that the Fed would step in to cushion any hit to a record U.S. economic expansion have helped Wall Street’s main indexes resume their rally after a slump in May.

The benchmark S&P 500 has climbed about 19% this year and briefly breached the 3,000 point mark for the first time on Wednesday. The blue-chip Dow has risen 15%, while the tech-laden Nasdaq has gained 24%.

Shares of health insurers such as UnitedHealth Group Inc , Cigna Corp and drug distributors like McKesson Corp gained between 9.5% and 3.5% premarket after a report that the Trump administration has withdrawn its proposal to eliminate rebates from government drug plans.

The top ten gainers among the S&P 500 companies trading premarket were healthcare stocks.

At 8:48 a.m. ET, Dow e-minis were up 85 points, or 0.32%. S&P 500 e-minis were up 4.5 points, or 0.15% and Nasdaq 100 e-minis were up 9.5 points, or 0.12%.

Delta Air Lines Inc rose 1.9% after reporting a 39.3% rise in quarterly profit, as the carrier benefited from higher fares and flying fuller planes.

This comes a day after American Airlines Group Inc raised its estimate for second-quarter unit revenue. Shares of American, United Airlines Holdings and Southwest Airlines Co rose between 0.5% and 0.8%. (Reporting by Medha Singh and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila)

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