S&P 500; US Indexes Fundamental Daily Forecast – Media Merger Mania Driving Stocks Higher Ahead of Fed

The catalyst behind the rally in the media sector is a judge’s ruling that the AT&T and Time Warner deal could go through. This raised valuations across the media industry and opened the door for further merger activity.
James Hyerczyk
U.S. Stock Indexes
U.S. Stock Indexes

The major U.S. stock indexes are trading firm at the mid-session, shortly before the release of the Fed interest rate decision and monetary policy statement. The broader S&P 500 Index and Dow Jones Industrial Average are posting relatively small gains, but the NASDAQ Composite is performing extremely well on the back of a strong surge in media related stocks.

The catalyst behind the rally in the media sector is a judge’s ruling that the AT&T and Time Warner deal could go through. This raised valuations across the media industry and opened the door for further merger activity.

In the cash market at 1618 GMT, the benchmark S&P 500 is trading 2789.85, up 3.00 or +0.11%. The blue chip Dow Jones Industrial Average is at 25330.94, up 10.21 or +0.04% and the tech-driven NASDAQ Composite is at 7741.75, up 37.96 or +0.49%.

According to reports, media stocks are moving on all of the possible M&A activity and potential M&A targets.

Shares of Twenty-First Century Fox are up 7.4 percent in anticipation of a bidding war between Comcast and Disney for the company. Time Warner shares are up 3.3 percent in the wake of the judge’s ruling. Netflix is up 3.2 percent after Goldman Sachs raised its share price target by $100.

Some traders are concerned the rally won’t last the full-session if the Fed is more hawkish than previously anticipated. The FOMC is widely expected to raise rates 25 basis points at 1800 GMT, however, some investors are concerned the central bank may signal at least two more rate hikes later this year.

In other news, earlier today, the U.S. Producer Price Index came in at 0.5 percent, much higher than the 0.3 percent forecast. Core PPI also rose more than expected at 0.3%.

Crude oil received a boost after the U.S. Energy Information Administration’s weekly inventories report showed a 4.1 million barrel draw down. Traders were looking for a 1.4 million barrel draw.

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