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Markets React to Beige Book

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Stocks Wednesday regained just about all of their losses from yesterday. And hovering at the highs of the day, stocks were little changed following the release of the Fed’s latest Beige Book report.

The Good:

In the report, the 12 Districts saw economic activity continuing to rise “albeit at a modest pace” in September and early October. As some of the industrials as alluded to in their reports this earnings season, the Fed Districts noted manufacturing activity continues to expand with orders and production improving.

Meanwhile, sales of new vehicles remained sold, and travel/tourism “picked up” (see the encouraging results from the airlines today!).

The Not-So-Good:

But just as Eaton and UTX indicated earlier this morning, commercial construction is “expected to remain weak.”

Housing markets “remained weak with most Districts reporting sales below year-ago levels.” Further signs of that weakness was seen this morning as the Mortgage Bankers Association reported mortgage applications for new homes fell 7 percent in the last week.

Consumers also remained very “price-conscious and were largely limiting purchases to necessities and non-discretionary items.”

And don’t think shoppers were just looking for discounts on discretionary items. Consumers have been very price-sensitive even when buying necessities like groceries. A great example of that: take a look at supermarket Supervalu, which is down sharply for the second straight day (it’s down nearly 20 percent in two days!!!). Yesterday, the company missed estimates and slashed guidance, citing its need for increased discounting to help spur sales and help maintain its customer base.

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