Market update: Interest rates rise and two media giants merge

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This week in the stock market

  • On Wednesday, the Federal Reserve raised interest rates for the second time in 2018, from 1.75% to 2%. They also signaled two additional rate hikes were likely in 2018. Monetary policy is now anticipated to be slightly more aggressive than previously expected.
  • A federal judge approved the $85 billion acquisition of Time Warner Inc. by AT&T Inc. The acquisition marked one of the biggest transactions in telecom history.
  • On Thursday, the Nasdaq composite rose +0.9% to close at an all-time high, possibly from dealmaking activity of media companies.

The Fed raises interest rates

As previously anticipated, the Federal Reserve completed a second increase to interest rates for 2018, moving rates up from 1.75% to 2%. The last time rates were above 2% was the summer of 2008, before the financial crisis. What does the ==federal rate increase mean for consumers==? It affects them in many ways, including making it more expensive for banks to borrow money. This will likely translate into higher borrowing costs for cars, mortgages, and credit cards over the next year.

As MoneyLion Plus members, rest assured this will not affect our borrowing rates. You will continue to have access to low-rate loans of 5.99% APR. We are committed to helping you build better financial habits by offering the best financial advice and products.

Wednesday’s rate hike was accompanied by signs for two additional rate increases expected later this year, along with more aggressive plans to tighten monetary policy. A tight monetary policy is when the Federal Reserve attempts to narrow spending because the economy seems to be growing too quickly. This is done in an attempt to avoid ==fast-rising inflation==.

AT&T set to acquire Time Warner

This week, a federal judge approved the acquisition of Time Warner Inc. by AT&T Inc., rejecting a prior attempt to block the $85 billion deal by the Trump administration. AT&T will now assume ownership of all Time Warner networks, which include HBO, CNN, Warner Bros. Entertainment, DC Comics, and a partial stake in Hulu (didn’t realize they were so big, did you?).

The deal was publicly scrutinized by President Trump, who stated that the merger would cause “too much concentration of power.” This could potentially affect consumers as net neutrality came to end late April 2018. This means that a company like AT&T could potentially choose to prioritize Internet speeds for one of its subsidiaries over the likes of competitors (like Netflix). To soften concerns, AT&T has signed an agreement promising not to participate in this practice.

Nasdaq composite closes at record high

The tech-based Nasdaq composite index closed 0.9% higher Thursday, possibly due to the recent dealmaking activity of major media companies. This marks an all-time high for the index. Besides the purchase of Time Warner by AT&T Inc., Twenty-First Century Fox made a bid to purchase Comcast for $65 billion in attempts to top Disney’s prior bid of $52.4 billion. The S&P 500 was also up +0.25%, and the Dow Jones Industrial Average (DJIA) was moderately down -0.10% at closing Thursday.

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