Everyone knew coming into this week that there would be no shortage of tradable news -- and they have not been disappointed. The news wires have been humming; and today they are buzzing with corporate and macro items.
The biggest piece of corporate news is last night's legal ruling by a federal judge that will enable AT&T (T) to close on its acquisition of Time Warner (TWX) without any restraints. That ruling also came with a warning that the Department of Justice (DOJ) should not try to press the ruling by filing for an emergency stay that would prohibit the deal from being completed next week.
The win for AT&T (and the defeat for the DOJ) has opened a wide door of M&A opportunity in the media space, as well as elsewhere, for companies seeking a vertical M&A path. That's why stocks like CVS (CVS) and Aetna (AET) are trading up in response to a media deal, as those two companies are trying to execute a large vertical merger of their own in the health care sector.
The media stocks will be actively traded and there will be a lot of talk today about the implications of the AT&T-Time Warner ruling, one of which is that it has cleared a path for Comcast (CMCSA) to take a run at challenging Disney's (DIS) bid to acquire the assets of 21st Century Fox (FOX.A).
Another piece of news on the M&A front involves medical device company Stryker (SYK), which has shot down speculation that it is in discussions to acquire Boston Scientific (BSX). Shares of SYK are up 6.5% on that declaration while shares of BSX have dropped 6.6%.
Beyond the hotbed of M&A considerations, market participants are also dialed in on today's FOMC decision and press conference, which will occur at 2:00 p.m. ET and 2:30 p.m. ET, respectively.
The FOMC is expected to raise the target range for the fed funds rate by 25 basis points to 1.75% to 2.00%, yet there has been some chatter that the fed funds rate increase will also be accompanied by an increase to the interest rate on excess reserves.
This meeting will produce updated economic and rate-hike projections, which will be explained by Fed Chairman Powell at his press conference. All eyes will be glued on the so-called "dot plot" to see if it points to a prevailing expectation among Fed members that there will be a total of four rate hikes this year, as opposed to three rate hikes that were projected at the time of the March meeting.
Either way, the FOMC decision is full of potentially market-moving capabilities that cut across the stock, bond, currency, and commodities markets.
The same could be said about trade matters, but in recent weeks the market has shown less sensitivity to trade headlines with a seemingly negative slant. That is evident again today, as there hasn't been any fallout from press reports that are suggesting the U.S. could impose new tariffs very soon -- perhaps as early as Friday -- on Chinese goods.
The market's trade angst could rise again, but for now, it continues to abide by a belief that the U.S. might get engrossed in trade skirmishes as opposed to an all-out trade war. That's the logical explanation for why the market has become less skittish about contentious-sounding trade developments of late.
Separately, the Producer Price Index for May carried a headline surprise.
The index for final demand increased 0.5% (Briefing.com consensus +0.3%), led by a 1.0% increase in prices for final demand goods that was largely attributable to a 4.6% jump in the index for final demand energy. The index for final demand, excluding food and energy, rose 0.3% (Briefing.com consensus +0.2%).
On a year-over-year basis, the index for final demand was up 3.1% -- the largest increase since January 2012 -- versus 2.6% in April. The index for final demand, excluding food and energy, was up 2.4%, versus 2.3% in April.
The key takeaway from the report is that large increases were registered in the indexes for processed goods for intermediate demand (+1.5%) and unprocessed goods for intermediate demand (+2.5%), which was related mostly to higher energy prices. This suggests a potential buildup of pipeline pricing pressures that could carry through to the index for final demand if there isn't any energy price relief.
There wasn't much response in the futures market to the PPI data. The indication there is that the cash market should start the day on a slightly higher note. the S&P futures are up four points and are trading 0.1% above fair value. The Nasdaq 100 futures are up 15 points and the Dow Jones industrial Average futures are up 31 points.