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Stock Futures Flat Ahead Of Fed; AT&T Ruling Charges Premarket Trade

DATE POSTED:June 12, 2018

Stock futures buzzed in tightly mixed action Wednesday, as a court ruling in Washington late Tuesday electrified early trade. Time Warner (TWX), Discovery Communications (DISCA), 21st Century Fox (FOX) and Express Scripts (ESRX) were just a few of the names spun into motion after the ruling.

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Gains and losses among telecom stocks bracketed Tuesday's late trade.

21st Century Fox and Discovery Communications led both the Nasdaq 100 and the S&P 500, although futures for both indexes slipped to fractional declines. Comcast (CMCSA) took the largest loss among Nasdaq 100 stocks. H&R Block (HRB) fell furthest among S&P 500 names.

Dow Jones futures were down a fraction, struggling against a heavy loss by Walt Disney (DIS) after the court decision. Nasdaq 100 futures rose a fraction and S&P 500 futures were up less than 0.1%.

AT&T-Time Warner Deal Lurches Ahead

Time Warner scaled up more than 4%, following a ruling by a U.S. district judge to allow AT&T to move forward with its $85 billion acquisition of the company. The decision caps a 20-month effort to earn approval for a deal that will make AT&T the top U.S. distributor of pay TV. AT&T saw the deal as essential to its effort to compete for advertising dollars with internet content providers led by Facebook (FB) and Alphabet's (GOOGL) Google. The Department of Justice is reportedly considering filing an appeal to the ruling.

AT&T traded down 2%. Comcast dropped 3%. Walt Disney dipped 1.7%. Discovery Communications had jolted 5% higher late Tuesday, but was inactive early Wednesday. 21st Century Fox surged 7%. Fox ended Tuesday's session near the top of a buy range, above a 38.66 buy point that it had initially cleared on May 8.

Health Care Stock Futures Jump

The AT&T ruling also sent a handful of health care names higher. Pharmacy benefits manager Express Scripts scrambled 2% higher. Regulatory resistance to the AT&T deal led investors to grow wary of Cigna's (CI) $52 billion effort to take over Express Scripts. Cigna shares were unchanged early Wednesday.

Tuesday's ruling also eased investor concerns over CVS Health's (CVS) $69 billion bid to acquire Aetna (AET). Aetna rose 4% and CVS Health climbed 2% in late trade Tuesday. Both stocks were inactive ahead of Wednesday's open.

Fed Rate Vote And Outlook: ECB, BOJ Next In Line

Despite the Time Warner ruling, the market returned to the standard "lay low" pose it typically strikes ahead of key Federal Reserve decisions. Markets are geared for a quarter-point hike to between 1.75% and 2%. That would mark the Fed's seventh increase since 2015. And views are split on whether the Fed is likely to hoist rates one or two more times during the second half of 2018.

The Fed offers up its official policy announcement at 2 p.m. ET. Fed Chairman Jerome Powell's press conference, scheduled at 2:30 p.m. ET, could provide additional details on how Fed strategy might play out during the remainder of the year.

The European Central Bank meets to discuss its rate policy and the possible wind-down of its monetary stimulus program on Thursday. On Friday, the Bank of Japan has its monthly monetary policy meeting. Japan is expected to maintain its rate policy, with a 10-year government bond target yield near 0%.

Earnings: Pivotal Climbs, H&R Block Collapses

H&R Block swooned more than 19% after reporting fiscal fourth-quarter sales and earnings comfortably above analysts targets. Full-year revenue guidance was just below consensus expectations, however, as the company said discount pricing would affect its top-line performance.  The stock had been climbing the right side of an 11-month base.

Pivotal Software (PVTL) reported after Tuesday's close. Shares jumped more than 5% in late trade, but were inactive early Wednesday. Fiscal first-quarter revenue blasted past consensus expectations and losses were less than forecast. The San Francisco-based company also hoisted Q2 EPS and revenue guidance above estimates. The stock is extended after clearing an IPO base on June 6, ending Tuesday up 41% from its April IPO at 15 a share.

Staffing services leader Korn Ferry (KFY) and China's BitAuto Holding (BITA) are scheduled to report quarterly results Wednesday morning. Korn Ferry shares are extended, up 25% since clearing a flat base in March.

Oil Price On Watch Ahead OF EIA Data

Oil prices could be a factor in Wednesday trade, as they slipped late Tuesday following weekly data from the American Petroleum Institute. Europe's Brent crude benchmark was down 0.4%, while West Texas intermediate dipped 0.2%, holding above $66 a barrel, early Wednesday.

Data released from the API showed a 730,000-barrel draw on U.S. oil inventories, well below consensus expectations for a 2.7-million-barrel drawdown. Earlier on Tuesday, news reports said Saudi Arabia had boosted its production back above 10 million barrels per day and had plans to increase by an additional 100,000 barrels in June.

The Energy Information Administration releases official oil inventory data at 10:30 a.m. ET on Wednesday.

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