NEW YORK (AP) — U.S. stocks are little changed Wednesday after a federal court ruled that AT&T's $85 billion purchase of Time Warner can proceed. That could pave the way for hundreds of billions' worth of deals in the media and phone industries as well as health care, as investors felt numerous mergers now stand a better chance of getting approved. Investors are also waiting for the Federal Reserve to conclude its current meeting, where the central bank is expected to raise interest rates.
KEEPING SCORE: The S&P 500 index was unchanged at 2,787 as of 1:40 p.m. Eastern time. The benchmark index is at its highest level since late January, when investors began worrying about a sharp pickup in inflation. Those concerns have since eased. The Dow Jones industrial average lost 9 points to 25,311.
The Nasdaq composite gained 25 points, or 0.3 percent, to 7,728. The Russell 2000 index of smaller-company stocks lost 5 points, or 0.3 percent, to 1,677. Both of those indexes are at record highs.
Most of the stocks listed on the New York Stock Exchange traded lower.
CABLE CONNECTION: Late Tuesday a judge approved AT&T's $85 billion purchase of Time Warner and rejected the government's argument that the deal would stifle competition and lead to higher cable bills. The purchase will give the wireless and cable giant control of CNN, HBO and the Warner Bros. movie studio. Time Warner climbed 3 percent to $99.06 while AT&T lost 5 percent to $32.65.
Media companies rallied. Netflix gained 4.5 percent to $380.07 and cable channel operator Discovery rose 3.9 percent to $24.96. CBS gained 3.8 percent to $54.39 and Dish Network picked up 2.5 percent to $33.20.
WHAT'S NEXT?: Investors are waiting for Comcast to officially announce an all-cash offer for Twenty-First Century Fox's entertainment businesses, and Fox surged 7.3 percent to $43.51 while Comcast added 0.8 percent to $32.64. Comcast has said it's preparing an offer but was waiting for the outcome of the AT&T case. Fox has agreed to sell those businesses to Disney for $52.4 billion in stock, setting up the possibility that Disney will have to raise its offer. However Disney added 3.2 percent to $107.69.
T-Mobile USA and Sprint also edged higher. T-Mobile plans to buy Sprint for $26.5 billion, but investors have been skeptical the government would allow the third- and fourth-largest wireless carriers to combine. T-Mobile added 1.5 percent to $58.94 and Sprint gained 2 percent to $5.42.
HEALTH CARE: Health insurer Aetna rose 3.6 percent to $187.23 and drugstore and pharmacy benefits management company CVS Health gained 2.3 percent to $67.85. Another pharmacy benefits manager, Express Scripts, jumped 3.2 percent to $81.67 as investors bet its sale to health insurer Cigna is more likely. Cigna fell 2.1 percent to $175.15. CVS agreed to buy Aetna for $69 billion in December and the $52 billion Express Scripts-Cigna deal was announced in March.
THE QUOTE: Erik Gordon, a professor at the University of Michigan's Ross School of Business, said the ruling is probably a good sign for the two health care deals because, like AT&T and Time Warner, those acquisitions won't reduce the number of companies competing in an industry, unlike a Sprint-T-Mobile merger. Still, he said investors might be drawing overly broad conclusions from Judge Richard Leon's ruling.
"The judge's decision is based on some very particular facts of the AT&T-Time Warner case," he said, including the growing popularity of streaming services and greater competition for advertising revenue. "This isn't a case that's about a big sweeping legal philosophy."
CENTRAL BANKS: Investors are almost certain the Federal Reserve will raise interest rates Wednesday afternoon. The greater concern is what the Fed will do next. The Fed itself has projected three increases in rates this year, meaning one more increase in the months to come. But investors will be looking for hints that the Fed is thinking about raising rates two more times instead.
That's the beginning of a busy week for central banks. On Thursday, the European Central Bank will meet and could outline an end to its stimulus program, while on Friday the Bank of Japan is due to give its latest policy update.
BLOCK GETS BLOCKED: H&R Block plunged 17 percent to $24.56 as CEO Jeffrey Jones said the tax preparer is "too reliant on price to grow revenues." H&R Block is forecasting smaller profit margins in the current fiscal year than it reported in the 12 months that just ended.
STRUCK DOWN: Medical device maker Boston Scientific dropped 5.4 percent to $32 and Stryker rose 2.4 percent to $166.41 after Stryker said it is not in talks with Boston Scientific about a possible acquisition. Boston Scientific jumped Tuesday after the Wall Street Journal reported that Stryker offered to buy it.
BONDS: Bond prices edged higher. The yield on the 10-year Treasury note dipped to 2.95 percent from 2.96 percent.
ENERGY: Benchmark U.S. crude rose 0.6 percent to $66.77 a barrel in New York. Brent crude, used to price international oils, gained 1.2 percent to $76.77 per barrel in London.
CURRENCY: The dollar rose to 110.42 yen from 110.33 yen. The euro rose to $1.1787 from $1.1750.
OVERSEAS: 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.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay