Stocks fell after the U.S.Federal Reserve hiked interest rates and indicated that two more increases are likely this year.
The Dow Jones Industrials slumped 119.53 points to 25,201.20, as losses in Boeing and Caterpiller offset positive numbers in the Walt Disney Company.
The S&P 500 slipped 11.22 points to 2,775.63, as health-care and consumer discretionary stocks struggled against losses in energy and telecommunications.
The NASDAQ faded 8.1 points from an intraday high to 7,695.70, having shed points following the Fed’s decision.
The Federal Reserve hiked interest rates 25 basis points after its June meeting as widely expected and suggested two more increases are likely this year. According to the Fed’s so-called dot plot, which tracks participant expectations for interest rates, members now expect four hikes this year, up from the three previously expected.
The Fed changed several phrases from its prior memos, citing more optimistic economic growth and higher inflation expectations.
Wednesday’s increase in rates moves the funds target rate to 1.75% to 2%.
Bank stocks jumped following the Fed’s decision, spurred higher by the adjusted expectations for more rate hikes. Goldman Sachs shares traded 1.3% higher, Morgan Stanley traded 1% higher and Bank of America traded 0.6% higher.
Media and telecommunications stocks also rose Wednesday following a U.S. District Court’s decision to allow AT&T’s $85-billion bid for Time Warner.
The federal judge’s ruling did not impose conditions on the merger’s approval, clearing the way for other vertical deals. The approved deal gives the pay-TV provider ownership of cable companies such as HBO and CNN as well as film studio Warner Bros.
Shares of Twenty-First Century Fox rallied 6.9% Wednesday, ahead of a widely anticipated bidding war between Comcast and Disney for portions of Rupert Murdoch’s business.
Disney, which offered Fox an all-stock, $52.4-billion deal for assets including cable networks and its entertainment businesses, will likely be forced to decide whether it’s willing to top a significantly higher bid from Comcast. Disney shares turned around after opening lower and were higher by 2%.
Time Warner shares rallied 2.3% following the ruling, while online television and film company Netflix rallied 5% after Goldman Sachs reiterated its buy rating on shares and raised its price target to the highest on Wall Street.
AT&T shares declined.
Washington says producer prices in May increased more than expected for their largest annual increase in more than six years. The producer price index rose 0.5% last month boosted by a rally in gasoline prices and increased service costs. In the 12 months through May, the PPI increased 3.1%.
Prices for the benchmark for the 10-year U.S.Treasury were lower, raising yields to 2.98% from Tuesday’s 2.96%. Treasury prices and yields move in opposite directions.
Oil prices gained 35 cents to $66.71U.S. a barrel.
Gold prices picked up $4.80 at $1,304.20U.S. an ounce.
This article provided by NewsEdge.