Investors largely shrugged off a landmark summit between President Donald Trump and North Korean leader Kim Jong Un Tuesday, but fevered after-hours trading commenced in U.S. stocks following a federal judgeâ€™s ruling that AT&T Inc. can proceed with its planned acquisition of Time Warner Inc.
Just after the Dow Jones Industrial Average closed down 1.58 points, or less than 0.1%, at 25320.73, U.S. District Judge Richard Leon announced his decision, rejecting the Justice Departmentâ€™s allegations that the deal would suppress competition in the pay-TV industry. The ruling caused shares of several big media companies to spike up and down, with investors expecting far-reaching impacts on deal-making activity that could reshape the industry landscape.
AT&T shares fell 1.8% in after-hours trading as of 5 p.m. ET, while Time Warner added nearly 5%. Comcast , which has been planning a bid to buy the bulk of 21st Century Fox â€™s assets that could disrupt Walt Disney â€™s roughly $52 billion deal, declined 2.9%. Any offer from Comcast could raise similar concerns with the Justice Department. Disney shares slid 1.4% and Fox rose 4.3%. Fox and Wall Street Journal parent News Corp share common ownership.
The ruling came after a day in which several analysts said investors were reluctant to make major moves before other big decisions: announcements from the Federal Reserve and European Central Bank this week that could shape the next leg of the global economic recovery that began in the wake of the financial crisis 10 years earlier.
â€œInvestors donâ€™t like surprises,â€ said David Campbell, a principal with Bingham, Osborn & Scarborough, a San Francisco-based financial advisory firm that oversees $4.2 billion. â€œIâ€™m keeping an eye on inflation and interest rates that are relative to that. Surprises with either of those can throw things off a bit.â€
The S&P 500 rose 4.85 points, or 0.2%, to 2786.85, while the Nasdaq Composite gained 43.87 points, or 0.6%, to 7703.79 to close at a new record.
Meanwhile, the stock market appeared to have little reaction to the day of talks between President Donald Trump and North Korean leader Kim Jong Un in Singapore that ended with a vague commitment to denuclearize the Korean Peninsula. Analysts largely said the outcome of the talks remained unclear and that North Korean risks more generally were difficult to price.
â€œIt may be an interesting historic moment, but itâ€™s only a modest step in removing that tail riskâ€”markets are taking it somewhat skeptically and want to see much more concrete follow-up,â€ said Larry Hatheway, chief economist and head of investment solutions at GAM Holding.
Fewer than 5% of fund managers surveyed by Bank of America Merrill Lynch in June viewed North Korea as the biggest tail risk for markets, far behind a trade war or a hawkish policy error from the Fed or ECB.
On Tuesday, investors stuck to a strategy that has worked throughout much of the rally over the last decade: buying shares of technology companies. Tech firms in the S&P 500 gained 0.6%, as shares of Twitter jumped $2.07, or 5%, to $43.49 after a JPMorgan Chase analyst raised the social-media stockâ€™s price target.
Defense stocks struggled after Mr. Trump said he would halt joint military exercises with South Korea as long as talks remained productive with North Korea. Shares of Lockheed Martin and Northrop Grumman both fell more than 1%.
Yields on 10-year U.S. Treasurys settled at 2.959%, little changed from a day earlier.
The Fed began its two-day policy meeting in Washington on Tuesday, and investors largely expect officials to raise the benchmark short-term interest rate by another quarter percentage point at its conclusion. On Thursday, the ECB will announce its own policy decision, which could include details on how it plans to wind down its bond-buying program.
Elsewhere, the Stoxx Europe 600 rose 0.1% after paring earlier gains to match the muted index movements in other stock-market regions.
Shares of South Korean companies, which generate roughly half their revenues abroad, edged down 0.1% Tuesday, while Japanâ€™s Nikkei rose 0.3% and Hong Kongâ€™s Hang Seng gained 0.1%.