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Pre-Market Primer: Consumer Spending Beats Expectations, Stocks Bounce Back


Personal income increased less than expected, but spending grew even faster as Americans are slowly getting more optimistic on the economy.

Stock futures are pointing up on the last day of the quarter as consumer spending rose more than expected.

European stocks advanced today, as the region's finance ministers convene to discuss strengthening sovereign rescue funds. The group agreed to almost double the size of the the European Stability Mechanism to 700 billion euros, a bit less than previously thought.

American equities futures were positive even before the release of consumer spending numbers.
  • Dow (^DJI) futures are up 0.41% at 13,131.00.
  • S&P 500 (SPY) futures are up 0.45% at 1,404.50.
  • Nasdaq (^IXIC) futures rose 0.41% to 2,769.50.
The Commerce Department reported that consumer spending in February was 0.8% greater than in January. This was at the higher end of economists' estimates. Personal income only rose 0.2%, slightly less than consensus estimates.

Oil is bouncing back after the biggest drop in months as the dollar weakened against the euro. WTI crude is up 49% to $103.28/barrel this morning.

Research In Motion (RIMM) dropped 9% after the bell yesterday after reporting a $125 million dollar loss for the holiday quarter. Analysts were bearish on RIM to begin with, given the company's failure to compete with Apple's (AAPL) iPhone and other phone makers running on Google's (GOOG) Android operating system, but last quarter's loss was even steeper than expected. Even excluding writedowns, profit for the fourth quarter more than halved since the year before. RIM's new CEO, Thorsten Heins, unlike his stubborn predecessors, is considering radical strategies to revive the company. Selling the company isn't off the table for Heins. RIM will stop giving financial forecasts.

Moody's Investor Services is considering cutting its credit ratings on 17 major financial companies in May. Bank of America (BAC) and Citigroup (C) are both on the chopping block. Morgan Stanley (MS) might be downgraded by three notches.

Twitter: @vincent_trivett
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