By Sruthi Shankar
(Reuters) - U.S. stocks were flat on Wednesday ahead of the Federal Reserve's policy announcement, while media shares got a boost from a court approval for AT&T's $85 billion takeover of Time Warner.
Shares of the HBO channel owner jumped 3.6 percent after the approval, which is expected to trigger a wave of corporate mergers. AT&T dropped 3.8 percent and weighed the most on the S&P telecoms index, which fell 2.6 percent.
Twenty-First Century Fox surged 7.8 percent as Comcast Corp is expected to outbid Disney for some of its assets.
"(The ruling) sounds like it opened the door for consolidation, which should excite investors in that space," said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
At 9:55 a.m. ET, the Dow Jones Industrial Average was up 3.68 points, or 0.01 percent, at 25,324.41, the S&P 500 was up 0.75 points, or 0.03 percent, at 2,787.60 and the Nasdaq Composite was up 12.94 points, or 0.17 percent, at 7,716.74.
Investors are awaiting the Fed's decision on monetary policy at 2:00 p.m. ET. With the 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.
A Labor Department report on Wednesday showed U.S. producer prices increased more than expected in May, leading to the biggest annual increase in nearly 6-1/2 years, but underlying producer inflation remained moderate.
Six of the 11 major S&P sectors were higher, led by a 0.5 percent gain in the healthcare index.
Stryker jumped 5 percent after the medical device maker said it was not in talks to buy rival Boston Scientific, following a media report of a potential deal between the two.
Netflix rose 2.6 percent after Goldman Sachs forecast that 2018 would be the peak negative-free cash flow year for the company.
Declining issues outnumbered advancers for a 1.08-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded 36 new 52-week highs and two new lows, while the Nasdaq recorded 99 new highs and 11 new lows.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)
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