Stocks Slip After Fed Says Interest Rates Will Rise Faster

NEW YORK (AP) -

U.S. stocks slipped Wednesday after the Federal Reserve raised interest rates and said it expects to increase rates two more times by the end of the year. Investors bet that several huge deals are more likely to happen after a federal court cleared AT&T’s $85 billion purchase of Time Warner.

Wall Street was already certain the Fed would raise interest rates Wednesday. The central bank’s decision makers also said they plan to raise rates two more times later this year for a total of four increases. Investors had debated all year if rates would rise three or four times, and some are concerned that if rates rise that quickly, it could stifle economic growth.

The ruling in the AT&T-Time Warner trial sent ripples through the media and telecommunications industries. Shares of Twenty-First Century Fox jumped as investors anticipated Comcast’s offer for Fox’s entertainment businesses. It came just after trading ended, as Comcast announced a $65 billion bid. The ruling also gave investors more confidence that two big takeovers in the health care field will now go through.

The S&P 500 index fell 11.22 points, or 0.4 percent, to 2,775.63 after it closed at a four-month high Tuesday. The Dow Jones industrial average lost 119.53 points, or 0.5 percent, to 25,201.20.

The Nasdaq composite slipped 8.09 points, or 0.1 percent, to 7,695.70. The Russell 2000 index of smaller-company stocks shed 5.76 points, or 0.3 percent, to 1,676.54.points. Both indexes finished at record highs Tuesday.

Media companies rallied. Netflix gained 4.4 percent to $379.93 and CBS gained 3.6 percent to $54.26.

Comcast had said it was preparing to make an offer for Fox’s entertainment divisions, but was waiting for the judge’s ruling. Fox jumped 7.7 percent to $43.66 Wednesday and was little changed in late trading. Comcast fell 0.2 percent to $32.32.

Fox has agreed to sell those businesses to Disney for $52.4 billion in stock, setting up the possibility that Disney will up its offer. However Disney added 1.9 percent to $106.31.

Investors now view CVS’s effort to buy health insurer Aetna as more likely to go through, and they felt similarly about Cigna’s offer for pharmacy benefits manager Express Scripts. T-Mobile USA and Sprint made smaller gains. Investors have been skeptical the government would allow the major wireless carriers to combine.

Bond prices turned lower as investors expected interest rates to rise. The yield on the 10-year Treasury note rose to 2.97 percent from 2.96 percent late Tuesday.

The dollar rose to 110.55 yen from 110.33 yen. The euro rose to $1.1773 from $1.1750.

Benchmark U.S. crude rose 0.4 percent to $66.64 a barrel in New York. Brent crude, used to price international oils, gained 1.1 percent to $76.74 per barrel in London.

Wholesale gasoline added 1.7 percent to $2.13 a gallon. Heating oil picked up 1.1 percent to $2.19 a gallon. Natural gas advanced 0.8 percent to $2.97 per 1,000 cubic feet.

Gold added 0.1 percent to $1,301.30 an ounce. Silver gained 0.6 percent to $16.99 an ounce. Copper inched up 0.1 percent to $3.25 a pound.

Germany’s DAX rose 0.4 percent. France’s CAC 40 and the FTSE 100 in Britain took tiny losses.

The Nikkei 225 in Japan rose 0.4 percent and South Korea’s Kospi fell less than 0.1 percent. Hong Kong’s Hang Seng dropped 1.2 percent.