U.S. economic activity expanded from mid-April through May, with a number of areas reporting stronger growth, the Federal Reserve said on Wednesday.

Seven of the 12 Fed districts described growth as modest or moderate, while the others reported growth as moderately strong, edging up, or somewhat faster than in recent months, according to the Fed's Beige Book summary of anecdotal economic conditions.

The Fed said overall wage pressures had not increased, but there were significant price increases for energy-related products.

However, districts generally did not indicate an increase in overall price pressures, the U.S. central bank said.

The report comes as a string of data showing a stronger economy than in the beginning of the year has markets guessing the Fed's next move may be an interest rate increase rather than a cut. The Fed has said inflation outside food and energy is elevated and its main concern is that core inflation will not ease as expected.

The U.S. central bank has held its target for benchmark overnight rates steady at 5.25 percent since June 2006 and is widely expected to hold them steady at its June 27-28 meeting.

Stocks rose immediately following the report, with the Standard & Poor's 500 index and the Nasdaq reaching session highs.

There was continued weakness in residential real estate and construction but rising strength in the commercial real estate sector, the Fed said.

Housing markets were weak in most districts and no district reported an increase in new home construction.

The job market was tight for skilled workers but layoffs continued among home builders and in industries associated with home building, the Fed said.

Wage gains were described as modest, steady, moderate, or easing in different Fed districts.

Meanwhile, the Fed said consumer spending -- which makes up two-thirds of the nation's output -- and retail sales were higher in late April and May.