Market Snapshot: Tech stocks rise but S&P 500, Dow trade mostly flat ahead of expected Fed rate hike

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 SPX, -0.08% 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, -5.20%  off 5.2%, and Verizon Communications Inc. VZ, -2.52% down 2.3%, was down 3.6%, leading the laggards among the S&P 500’s 11 sectors.

The Nasdaq Composite COMP, +0.18% 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 DJIA, -0.11% 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 VIX, +0.24% is trading at about 12, near its lowest levels of the year.

The Russell 2000 index of small-cap stocks RUT, -0.33% 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

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

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

Meanwhile, shares of AT&T Inc. lost 4.7%, while Time Warner Inc. TWX, +2.62%  added 2.8% 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 on the hope of further consolidation.

And 21st Century Fox Inc. FOX, +7.23%  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, +2.33% whose shares slipped 1.4%. However, rival Comcast Corp. CMCSA, -0.05%  is expected announce a rival bid $60 billion all-cash bid as soon as Wednesday. Comcast shares fell 3.5%.

In other corporate news, H&R Block Inc. HRB, -17.18%  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.

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, against the backdrop of rising oil prices CLN8, +0.39% 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.

—Barbara Kollmeyer and Carla Mozee contributed to this article

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