Alcoa may have put to rest fears that earnings season would be an unqualified disaster after its positive quarterly report last night, but the real news today came when the Fed released its Beige Book, which indicated steady growth and stable or increased hiring activity throughout most of the nation. Although high gasoline prices are weighing on both businesses and consumers, the markets responded favorably to the report, adding to gains. At around 2:45 p.m. EDT, the Dow Jones Industrials (INDEX: ^DJI) were up 97 points to 12,813, while the S&P 500 gained 11 points to 1,369.

While Alcoa is the best performer in the Dow with a 7% jump today, several other stocks are reaping the benefit of the Fed's positive report. Both Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM) are up sharply as the favorable outlook supports the theory that the economy can continue to grow at this modest pace, allowing the Fed to keep in place the policies that have helped boost bank balance sheets and earnings for years now. In fact, if conditions improve enough to allow the Fed to unwind its Operation Twist while keeping short-term rates low, the resulting steepening in the yield curve could actually make things even better for B of A and JPMorgan going forward.

Also on the upswing are stocks that are sensitive to government spending. Both Boeing (NYSE: BA) and United Technologies (NYSE: UTX) rose more than the overall market, as an improving economy also bodes well for possible restorations of defense budget cuts down the road. Boeing also revealed some enhancements to its 737 MAX aircraft to maximize fuel efficiency, while United Tech's Carrier heating and air conditioning division revealed a new line of gas furnaces that also sport energy efficiency.

The Fed and you
Nothing in the Beige Book suggests that the Fed plans to do anything to pump up stocks going forward. In fact, we've gotten indications that less Fed intervention may be coming. That might not make traders happy, but for long-term investors, getting the stock market off artificial life support is a key component of a lasting recovery.

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