Stocks slip on Fed plan for rate hikes

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

Wall Street was already certain the Fed would raise interest rates Wednesday. The central bank’s decision makers indicated a total of four increases this year. Some investors worry that if rates rise that quickly, it could stifle economic growth because consumers and businesses will have to pay more to borrow money.

The Fed’s projections weren’t a shock: For months there have been signs the economy is getting stronger. Another came Wednesday, when the Labor Department said wholesale prices climbed faster in May.

The Standard & Poor’s 500 index fell 11.22 points to 2,775.63. The Dow Jones industrial average fell 119.53 points to 25,201.20. The Nasdaq composite slipped 8.09 points to 7,695.70. The Russell 2000 index of smaller-company stocks fell 5.76 points to 1,676.54 points.

The ruling in the AT&TTime Warner trial sent ripples through the media and telecommunications industries. Time Warner shares climbed 1.8% to $97.95 while AT&T slid 6.2% to $32.22.

21st Century Fox jumped 7.7% to $43.66 and Comcast slipped 0.2% to $32.32 as investors anticipated Comcast would offer to buy Fox’s entertainment businesses. Comcast did so just after trading ended.

The AT&T ruling also gave investors more confidence that two big takeovers in the healthcare field will go through: CVS’ effort to buy health insurer Aetna and Cigna’s offer for pharmacy benefits manager Express Scripts.

Media companies rallied. Netflix climbed 4.4% to $379.93, and CBS advanced 3.6% to $54.26.

KB Home slid 7.3% to $26.26 on worries that housing sales could slow.

H&R Block dived 17.9% to $24.29 after the tax preparer said it plans price changes that will reduce its profit margins.

Bond prices fell as investors expected interest rates to rise. The yield on the 10-year Treasury note rose to 2.97% from 2.96%.

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% to $66.64 a barrel. Brent crude climbed 1.1% to $76.74 a barrel. Wholesale gasoline jumped 1.7% to $2.13 a gallon. Heating oil rose 1.1% to $2.19 a gallon. Natural gas rose 0.8% to $2.97 per 1,000 cubic feet.

Gold edged up 0.1% to $1,301.30 an ounce. Silver rose 0.6% to $16.99 an ounce. Copper edged up 0.1% to $3.25 a pound.