An already selectively weaker stock market, under pressure from disappointing earnings from International Business Machines (IBM – Free IBM Stock Report) and a sudden four percent plunge in oil prices, was at least treated to a generally benign Federal Reserve Beige Book economic summation. On point, the Fed noted that each of its 12 Federal Reserve Districts had experienced economic growth between mid-February and the end of March and that the pace of this improvement could be termed modest to moderate. In addition, the pickup was evident across the various economic regions of the country and the respective business sectors.
Specifically, manufacturing continued to expand at a modest to moderate gait and consumer spending showed selective strength. In this latter category, sales of light vehicles were strong, but revenues from non-auto sales weakened. At the same time, tourism and travel picked up, as did residential construction.
Interestingly, housing starts, in a report issued yesterday, noted some weakness in March, but building permits, a more forward-looking metric, indicated improvement. Finally, loan volume was up in the past two months, while energy-related business indicated some improvement.
Also improving were employment and wages, as the labor market remained tight. Prices, too, gained some traction. Given this cross section, it would seem that the central bank would continue raising interest rates in the months to come, with the next probable hike in rates most likely coming in June. None of this should rattle investors, who apparently are more focused on corporate profits, oil prices, and international events, with the back and forth involving North Korea seemingly of most interest at this point in time. So, stocks drifted lower after the Beige Book's release, especially, the Dow Jones Industrial Average.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.