Fed Sees Economy Growing at a 'Modest Pace' (SPY)

The Federal Reserve said in its Beige Book summary released this afternoon that it sees the economy growing "at a modest pace." The SPDR S&P 500 ETF (NYSE: SPY) dropped after the 2 p.m. release, but soon rebounded.

According to the report, "Consumer spending appeared to increase on balance despite continued consumer caution that limited nonessential purchases, while activity in the travel and tourism sector picked up relative to seasonal norms."

Further, "Reports on manufacturing activity pointed to further expansion, although the pace of growth eased according to several Districts."

The real estate market remains stagnant, the Fed reported. "Home sales slowed further following an initial drop after the expiration of the homebuyer tax credit at the end of June, prompting a slowdown in construction activity as well. Demand for commercial real estate remained quite weak but showed signs of stabilization in some areas."

In regard to credit markets, the Beige Book notes that "Reports from financial institutions pointed to generally stable or slightly lower loan demand and noted some modest improvements in credit quality."

The SPDR S&P 500 ETF is up 0.5% this afternoon, to $110.17.