Dow Jones Slips as Fed Beige Book Highlights Sluggish Growth and Rising Costs

U.S. stocks closed with mixed results on Wednesday as concerns over economic growth and inflation resurfaced following a disappointing jobs report and cautious signals from the Federal Reserve’s latest Beige Book. The Dow Jones Industrial Average snapped its four-day winning streak, ending the session down 91.90 points, or 0.22%. The S&P 500 hovered near flat, while the tech-heavy Nasdaq Composite edged up 0.32% to close at 19,460.49.

The tone on Wall Street shifted early after the ADP National Employment Report revealed private payrolls rose by just 37,000 in May—far below economists’ expectations. With the government’s official jobs report set for release on Friday, the weak ADP figures raised speculation that the Federal Reserve may be forced to consider interest rate cuts sooner than anticipated.

Bond markets reflected this sentiment, with the yield on the 10-year U.S. Treasury falling to 4.349%, its lowest level since early May, signaling a flight to safety as investors digested the downbeat data.

Adding to the uncertainty, the Fed’s Beige Book—a summary of anecdotal economic conditions across the country—indicated a “slight decline” in economic activity over the past six weeks. The report described flat hiring and limited business expansion, citing widespread uncertainty driven by federal policy indecision and rising tariff-related costs.

“All Districts reported elevated levels of economic and policy uncertainty,” the Fed noted, emphasizing that inflationary pressures remain a concern. Businesses surveyed reported increasing costs, with many expecting further price hikes in the months ahead. The term “tariffs” appeared 122 times in the report, up from 107 mentions in April, reflecting rising anxiety over trade policy.

Regions such as Boston, New York, and Philadelphia reported weakening economic activity, while areas like Richmond, Atlanta, and Chicago saw modest gains. However, even in districts showing growth, hiring remained cautious and investment plans were often on hold.

Companies in several sectors signaled that rising input costs are starting to eat into margins. Some are attempting to offset the impact by passing higher prices on to consumers, a trend that could influence future inflation data and monetary policy decisions.