By Mark DeCambre and Anora M. Gaudiano, MarketWatch
AT&T shares drop, Time-Warner, Fox shares soar after court
ruling
U.S. stock benchmarks saw muted action on Wednesday as investors
awaited a decision from the Federal Reserve, which is widely
expected to increase rates by a quarter of a percentage point and
offer details on path forward for monetary policy.
What did are markets doing?
The S&P 500 was flat at 2,786, with moves for the
broad-market gauge being supported by a 0.4% rise in technology
shares and a 0.5% climb for the consumer-discretionary sector.
The telecom sector, a tiny sector consisting chiefly of AT&T
Inc. (T) off 5.2%, and Verizon Communications Inc. (VZ), down 2.3%,
was down 3.6%, leading the laggards among the S&P 500's 11
sectors.
The Nasdaq Composite meanwhile, added 27 points, or 0.3%, to
7,730, but did set an intraday record 7,748.96 before paring those
gains.
The Dow Jones Industrial Average edged 10 points, or less than
0.1%, lower to 25,311.
Wednesday's muted moves follow a pattern of small gains amid low
volatility. The Cboe Volatility Index is trading at about 12, near
its lowest levels of the year.
The Russell 2000 index of small-cap stocks , which closed at an
all-time high, was off 0.3% at 1,677.46.
Read: Fund managers are overweight U.S. stocks for first time in
15 months
(http://www.marketwatch.com/story/stock-market-investors-just-fell-back-in-love-with-america-survey-2018-06-12)
What's driving the market?
Investors have priced in expectations that the Fed will lift the
federal-funds rate to a range between 1.75% to 2%, from 1.5% to
1.75%, marking the second rate hike this year and the seventh move
since the start of the tightening cycle in December of 2015.
A statement from the central bank is due at 2 p.m. Eastern Time,
followed by a press conference with Chairman Jerome Powell at 2:30
p.m. Eastern.
Wednesday's early action comes after a historic meeting between
President Donald Trump and North Korean leader Kim Jong Un.
Read:Five questions likely to be fired at Fed's Powell on
Wednesday
(http://www.marketwatch.com/story/5-challenging-questions-fed-chief-powell-may-encounter-2018-06-12)
Also:Fed goal is to signal an 'unhurried' pace of interest-rate
hikes
(http://www.marketwatch.com/story/feds-goal-is-to-signal-an-unhurried-pace-of-interest-rate-hikes-2018-06-08)
Meanwhile, shares of AT&T Inc. lost 4.7%, while Time Warner
Inc.(TWX) added 2.8% after Tuesday's court ruling
(http://www.marketwatch.com/story/att-wins-antitrust-ruling-to-acquire-time-warner-2018-06-12)
that AT&T can go ahead with its nearly $85 billion acquisition
of Time Warner.
While telecom stocks reacted negatively, media companies saw
their stocks jump on the hope of further consolidation.
And 21st Century Fox Inc.(FOXA) surged 7%, as that ruling will
likely give the media group the go-ahead to sell some of its TV and
movie assets. Fox has agreed to a $52.4 billion all-stock deal with
Walt Disney Co.(DIS), whose shares slipped 1.4%. However, rival
Comcast Corp.(CMCSA) is expected announce a rival bid $60 billion
all-cash bid
(http://www.marketwatch.com/story/potential-comcast-fox-deal-awaits-tuesdays-ruling-on-att-time-warner-merger-2018-06-10)
as soon as Wednesday. Comcast shares fell 3.5%.
In other corporate news, H&R Block Inc.(HRB) shares plunged
17%, adding to sharp loss late Tuesday even as the tax-preparation
company posted a first-quarter earnings beat and lifted its
dividend
(http://www.marketwatch.com/story/hr-block-shares-plunge-14-after-companys-q1-results-2018-06-12).
Looking ahead for the market, European Central Bank policy
makers are expected on Thursday to announce the timing for
unwinding bond buying, while the Bank of Japan will release its
policy decision on Friday.
On the data front, a measure of wholesale inflation jumped 0.5%
in May
(http://www.marketwatch.com/story/wholesale-inflation-surges-in-may-due-to-higher-oil-prices-ppi-show-2018-06-13),
against the backdrop of rising oil prices , adding upward pressure
on inflation in a steadily growing economy marked by supply
bottlenecks and a growing shortages of skilled labor.
Check out: How stock investors can profit from this week's Fed
meeting
(http://www.marketwatch.com/story/how-stock-investors-can-profit-from-this-weeks-fed-meeting-2018-06-12)
What are strategists saying?
"The Fed has telegraphed its rate decision so well, that very
few people expect any surprises," said Shannon Sacoccia, chief
investment officer at Boston Private Wealth.
"So far there has been very little negative reaction to the
strong jobs report and inflation data, which suggests that
investors don't expect the Fed to be aggressive. Of course, any
sign of hawkishness in the statement could hit the market,"
Saccocia said.
"The immediate market reaction [to the Fed] is likely to colored
by whether the median forecast in the dot plot moves to four hikes
this year. We think it will, but would caution against reading too
much into this measure which is always prone to discrete jumps,"
said Adam Cole, chief currency strategist at RBC Capital Markets,
in a note.
"We don't anticipate dramatic changes in the characterization of
economic growth or inflation in the press statement," Cole
added.
--Barbara Kollmeyer and Carla Mozee contributed to this
article
(END) Dow Jones Newswires
June 13, 2018 13:53 ET (17:53 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.