Stocks held onto the bulk of their earlier gains Wednesday afternoon following the release of the Federal Reserve's Beige Book report on economic conditions. The central bank sounded a few upbeat notes, reporting that "labor markets in most districts appear to be firming somewhat," and pointing out improved conditions in manufacturing, retail and financial services.
The survey of the Fed's 12 districts found that manufacturing continued to rebound across the board, with particular improvements in Richmond and Chicago. In Chicago's case, businesses reported aging auto fleets in both light and heavy vehicle resulted in a boost in new orders. Retail and non-financials were in better shape around the country, while transportation and financials saw more mixed improvement.
The Fed's report was not without its weak points. Housing remains a concern, reiterating the point made by Federal Reserve Chairman Ben Bernanke in his testimony to Congress last week. Home foreclosures and rising home inventories have created an overhang that will not be easily corrected.The Dow Jones industrial average was up 87 points at 11,759 after the report's 2:00 release. The Nasdaq was up 17 points at 2,734 and the S&P 500 was up 10 points at 1,285, narrowly below session highs.
On the flip side, employment signal were more encouraging than Bernanke has suggested, with the Beige Book finding "all district[s] indicated employment levels are rising in at least some sectors, generally by modest amounts." That modest improvement may not translate into better levels of consumer spending though, given that there was "virtually no upward pressure on wages."
Earlier Wednesday, Government reports on import/export prices and crude oil inventories showed that energy and food prices moved higher through 2010, but few other segments showed any signals of inflation.
