Media, telecom shares lift futures; Fed awaited

(Reuters) – A court approval for AT&T’s $85 billion takeover of Time Warner lifted media and telecom shares on Wednesday, helping U.S. stock futures ahead of the U.S. Federal Reserve’s policy announcement.

A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., June 4, 2018. REUTERS/Lucas Jackson

Time Warner (TWX.N) jumped 3.9 percent in premarket trading after the landmark ruling, which is expected to trigger a wave of corporate mergers. AT&T (T.N) dropped 4.2 percent.

Twenty-First Century Fox (FOXA.O) surged 8.1 percent as Comcast Corp (CMCSA.O) is expected to outbid Disney (DIS.N) for some of its assets as early as Wednesday.

Sprint (S.N), which is looking to merge with T-Mobile (TMUS.O), was also up 3.4 percent.

At 7:23 a.m. ET, Dow e-minis 1YMc1 were up 36 points, or 0.14 percent. S&P 500 e-minis ESc1 were up 5.25 points, or 0.19 percent and Nasdaq 100 e-minis NQc1 were up 21.5 points, or 0.3 percent.

Investors are awaiting the Fed’s decision on monetary policy at 2:00 p.m. ET. With this year’s second interest rate hike almost certain, market participants will look for signals on whether the Fed will move to raise rates three or four times this year.

“Market pricing is fairly split between three and four hikes this year, so it probably doesn’t require a hawkish signal to correct a mispricing,” Deutsche Bank strategist Jim Reid wrote in a note to clients.

Investors are focused on how the Fed characterizes its monetary policy as borrowing costs return to more normal levels amid an ongoing economic expansion. Fed Chair Jerome Powell holds a news conference after the decision.

U.S. Labor Department is set to release the producer price index at 8:30 a.m. ET. Economists expect producer prices to gain 0.3 percent in May, after rising 0.1 percent in the month before.

The S&P 500 .SPX closed higher and the Nasdaq hit a record intra-day high on Tuesday, boosted by gains in technology and utilities stocks.

Among others, Netflix (NFLX.O) rose 1.3 percent after Goldman Sachs forecast that 2018 would be the peak negative-free cash flow year for the company.

H&R Block (HRB.N) tumbled 17.7 percent after the tax preparation service provider projected lower EBITDA margins for 2019.

Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva