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Pre-Market Primer: Builders Step Up Construction and Spain Avoids the European Junk Pile


Spanish bond yields are at six-month lows; Europe is rallying.

MINYANVILLE ORIGINAL After a day of over 1% gains on two major stock indices, equities are relatively flat.

Builders broke ground on new homes at an annualized rate of 872,000 in September, blowing away economists' optimistic estimates of 765,000. In August, housing starts were at a rate of 750,000. Housing permits also shot up to 894,000 from 803,000.

Before the opening bell, Dow (INDEXDJX:.DJI) futures inched up 0.02% to 13,456.00. S&P 500 (INDEXSP:.INX) futures gained 0.18% to 1,451.80, and Nasdaq (INDEXNASDAQ:.IXIC) futures dropped 0.14% to 2,761.25.

After a surprise resignation, it turned out that Citigroup (NYSE:C) CEO Vikram Pandit was pushed out of his position, which he had held since just before the financial crisis, by the bank's board. Citigroup's stock has declined by 89% with Pandit at the helm.

Bank of America (NYSE:BAC) earned nothing per share in the third quarter, beating expectations of a $0.07 loss. The bank's revenue fell by 28% from last year to $20.4 billion. Mortgage production rose 13% over the previous quarter, mostly thanks to homeowners taking advantage of attractive refinance rates. Bank of America shares gained 2.75% after reporting earnings.

Intel (NASDAQ:INTC) shares tumbled 3.09% despite beating forecasts as the chipmaker's profits fell by 14% in the third quarter. A perfect storm of higher operating costs, slower growth in China, and lower PC sales drove down the company's profits.

IBM (NYSE:IBM) shares dropped nearly 4% after reporting that revenue dropped by 5.4% to $24.7 billion, falling short of estimates. Adjusted profit increased by 5% to $3.62 per share, beating expectations by a penny.

European stocks advanced, with Spain taking the lead as Moody's reaffirmed Spain's credit rating at Baa3 with a negative outlook, which leaves the country just barely in investment-grade territory. Greece, Cyprus, and Portugal cannot make this claim.

"The combination of euro area and ECB support and the Spanish government's own efforts should allow the government to maintain capital market access at reasonable rates, providing it with the time it needs to stabilize public debt over the next few years," Moody's wrote. "The maintenance of market access is critical because the risk that some form of burden-sharing will be imposed on bondholders is material for those countries that rely entirely or to a very large extent on official-sector funding for an extended period of time."

Spain is showing more willingness to take the ECB's offer of assistance. Spain's finance minister, Luis de Guindos said that they might request a "line of credit" that need only be used in the case of an emergency. Spain's 10-year bond yields fell to 5.53%, their lowest level in six months.

Twitter: @vincent_trivett
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