* Two more U.S. rate hikes now expected this year
* Media stocks bounce on AT&T-Time Warner ruling
* Indexes: Dow down 0.2 pct, S&P 500 down 0.2 pct, Nasdaq up 0.1 pct (Updates to late afternoon)
By Caroline Valetkevitch
June 13 (Reuters) - The Dow and S&P 500 were down slightly in afternoon trading on Wednesday after the Federal Reserve raised interest rates as expected and projected a slightly faster pace of rate hikes in the coming months.
Two additional hikes are now expected by the end of this year, compared to one previously.
In its decision on Wednesday, the Fed raised its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 percent and 2 percent.
"The statement was a bit hawkish relative to market expectations, and that's why we're not getting a rally. The June hike was already in the market and the market is keying off what they expect for the next six months and it was a bit more hawkish," said Jason Ware, chief investment officer at Albion Financial in Salt Lake City.
Stocks fell after the decision, but recovered some ground in late trading following comments from Fed Chairman Jerome Powell during a news conference.
At 3:30 p.m. ET, the Dow Jones Industrial Average fell 48.49 points, or 0.19 percent, to 25,272.24, the S&P 500 lost 4.66 points, or 0.17 percent, to 2,782.19 and the Nasdaq Composite added 6.67 points, or 0.09 percent, to 7,710.46.
A ruling that approved AT&T Inc's $85 billion deal to buy Time Warner Inc put the spotlight on media and telecom shares, which mostly rose.
Shares of HBO channel owner Time Warner rose 2.6 percent. AT&T dropped 5.5 percent, sending the S&P telecom services index down 3.9 percent.
Twenty-First Century Fox surged 6.9 percent on expectations Comcast Corp would outbid Walt Disney Co for some of its assets.
Declining issues outnumbered advancing ones on the NYSE by a 1.91-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.
The S&P 500 posted 40 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 151 new highs and 24 new lows.
Additional reporting by Megan Davies in New York and Sruthi Shankar in Bengaluru; Editing by Nick Zieminski and Meredith Mazzilli