Market Snapshot: Stock market attempts to climb ahead of expected Fed rate hike

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U.S. stock-market indexes were tentatively higher 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 SPX, +0.14% rose 4 points, or 0.2%, to 2,791, with six of the 11 main sectors trading lower. Telecoms shares were among the worst hit, with the sector down more than 3% after Tuesday’s court ruling that AT&T can go ahead with its nearly $85 billion acquisition of Time Warner.

The Nasdaq Composite COMP, +0.56% added 42 points, or 0.5%, to 7,746 and set an intraday record at 7,747.16.

The Dow Jones Industrial Average DJIA, +0.06% edged 22 points, or 0.1%, to 25,340.

Wednesday’s muted moves follow a pattern of small gains amid low volatility. The Cboe Volatility Index VIX, -1.78% is trading at about 12, near its lowest levels of the year.

The Russell 2000 index of small-cap stocks RUT, +0.12% which closed at an all-time high, was up fractionally.

Read: Fund managers are overweight U.S. stocks for first time in 15 months

What’s driving the market?

While investors continue to monitor any potential fallout from the meeting between President Donald Trump and North Korean leader Kim Jong Un, attention moved squarely toward the conclusion of the Fed’s two-day meeting on Wednesday.

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.

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.

Read: Five questions likely to be fired at Fed’s Powell on Wednesday

Also: Fed goal is to signal an ‘unhurried’ pace of interest-rate hikes

Looking ahead, 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.

A measure of wholesale inflation jumped 0.5% in May, 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

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.

What stocks could be active?

H&R Block Inc. HRB, -18.95%  shares plunged 19%, adding to sharp loss late Tuesday even as the tax-preparation company posted a first-quarter earnings beat and lifted its dividend.

Shares of AT&T Inc. T, -4.37%  lost 4.7%, while Time Warner Inc. TWX, +3.25%  jumped 3% after Tuesday’s court ruling 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.

And 21st Century Fox Inc. FOX, +7.37%  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, +2.52% whose shares slipped 1.4%. However, rival Comcast Corp. CMCSA, -0.57%  is expected announce a rival bid $60 billion all-cash bid as soon as Wednesday. Comcast shares fell 3.5%.

Pivotal Software Inc. PVTL, +26.05%  shares jumped 5% after the cloud-software company issued an earnings beat in its first report since an April initial public offering. Chief Executive Officer Rob Mee told MarketWatch in an interview that the company is focused on subscription revenue.

What are other markets doing?

The ICE U.S. Dollar Index DXY, -0.21% which measures the buck against six rivals, was off by 0.1% at 93.747.

Asian stocks were mixed, while European stocks SXXP, +0.27%  started to find slightly higher footing.

Crude-oil futures were moving lower, with July West Texas Intermediate crude CLN8, +0.35%  down 0.6% at $65.94. Gold futures GCM8, +0.12% slipped 0.1% to $1,297.60 an ounce, after tapping a high near $1,305 during the session.