Stocks drifted flat to slightly higher for much of Wednesday's session, but slipped in the afternoon following the Fed's decision to up its rate-hike forecast. The S&P 500 and the Dow Jones Industrial Average finished lower by 0.4% and 0.5%, respectively, while the Nasdaq shed 0.1%, slipping from its all-time high.

The Federal Open Market Committee decided to raise interest rates for the second time this year on Wednesday, increasing the fed funds target range by a quarter point to 1.75% to 2.00%. The market had expected the rate hike, but the updated rate-hike forecast took some by surprise as the Fed is now calling for four rate hikes in 2018 -- up from three in March. Treasuries sold off sharply following the policy release, sending yields to new highs, but bounced back a bit before the close. The benchmark 10-yr yield finished up two basis points at 2.98%.

Separately, the Wall Street Journal reported late in the session that the White House is preparing to implement tariffs on tens of billions of dollars of Chinese goods as early as Friday, which will likely spark heavy retaliation from Beijing. The equity market sold off and then bounced back following the Fed decision, but dropped once again following the WSJ report -- muddying the waters as to exactly what to credit for the slide into the close.

Elsewhere, media names were in focus after a federal judge ruled in favor of AT&T (T 32.22, -2.13, -6.2%) in its drawn-out legal battle with the Justice Department. The ruling allows AT&T to move forward with its acquisition of Time Warner (TWX 97.95, +1.73, +1.8%) and sets the stage for more merger activity in the future.

Comcast (CMCSA 32.32, -0.06, -0.2%), for instance, upped its bid for the bulk of 21st Century Fox's (FOXA 43.66, +3.12, +7.7%) assets immediately following Wednesday's closing bell. Comcast is now offering $35 per share, which represents a premium of around 19% to Walt Disney's (DIS 106.31, +1.98, +1.9%) all-stock offer. Fox had accepted the Disney offer six months ago, but the deal was never finalized, leaving the door open for Comcast to shake things up.

On a related note, Netflix (NFLX 379.93, +16.10), which has been a big player in forcing traditional media companies to reinvent themselves, rallied 4.4% on Wednesday, hitting a new all-time high. Goldman increased its target price for the content-streaming giant to $490 -- a new Street high -- which helped fuel the bullish bias.

Reviewing Wednesday's economic data, which was limited to the Producer Price Index for May and the weekly MBA Mortgage Applications Index:

• Producer prices rose 0.5% in May (Briefing.com consensus +0.3%) and core producer prices increased 0.3% (Briefing.com consensus +0.2%). Year-over-year, producer prices are up 3.1% (vs +2.6% in April) and core producer prices have risen 2.4% (vs +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.
• The weekly MBA Mortgage Applications Index decreased 1.5% to follow last week's increase of 4.1%.

On Thursday, investors will receive Retail Sales for May, export and import prices for May, weekly Initial Claims, and April Business Inventories. In addition, the European Central Bank will release its latest policy directive, which is expected to reference the end of the central bank's asset purchase program.

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