Stock Market Update

[BRIEFING.COM] The broader market remains relatively steady after the Fed released its July Beige Book this afternoon, the S&P 500 (+0.40%) in second place up 30 points. The report showed economic activity expanded at a slight to moderate pace across eleven of twelve Federal Reserve Districts, with growth broadly similar to the prior reporting period. Consumer spending edged higher, though elevated prices, particularly for fuel, continued to weigh on discretionary purchases as some households traded down to more affordable options. Tourism improved, while auto sales remained largely unchanged as consumers held onto vehicles longer and increased repair spending. Manufacturing activity strengthened modestly, supported by demand from data centers, machinery, and defense sectors, while construction activity benefited from continued data center development. Financial conditions remained stable, with modest gains in commercial and consumer lending, though consumer loan quality weakened slightly. Business contacts remained cautiously optimistic, but uncertainty around fuel costs, tariffs, and geopolitical risks continued to weigh on the outlook.

Overall, economic expectations remained cautiously positive, with businesses generally expecting continued expansion in the coming months despite persistent uncertainty around inflation, costs, and consumer demand.

• Employment: Employment increased modestly overall, with five Districts reporting gains and seven seeing little to no change. Hiring improved across manufacturing, construction, and retail, though businesses continued to report difficulty finding skilled workers, particularly technicians and tradespeople. Wage growth remained modest to moderate, with some increases tied to competition for specialized labor. Several Districts also noted greater use of AI in hiring processes and efforts to improve worker productivity.
• Prices: Prices continued to rise at a moderate pace, with nine Districts reporting moderate increases and two reporting robust growth. Input costs remained elevated across services, construction, and manufacturing, driven by higher energy, transportation, and raw material expenses, with some businesses attributing cost pressures to tariffs and Middle East tensions. While consumer prices continued to climb, some firms reported increased price sensitivity among customers and tighter margins as selling prices failed to fully offset rising costs.

Currently, the yield on the benchmark 10-year Treasury note is down about four basis points following the Beige Book release to 4.550%.