Consumer spending in the U.S. barely rose in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum.
Household purchases rose 0.5 percent, matching the median estimate of economists surveyed by Bloomberg and the biggest gain since February, according to data from the Commerce Department issued in Washington today. The gain mainly reflected a 0.4 percent jump in prices, the biggest since March 2011, leaving so-called real spending up 0.1 percent.
A slack job market and rising food and gasoline prices are squeezing households just as concern mounts that lawmakers might not be able to avoid the fiscal cliff of tax increases and government spending cuts slated to take effect next year. At the same time, rising stock prices and an improving housing market are lifting consumer confidence, which may help underpin demand.
Bank of America (BAC.N) said it settled a class action lawsuit with investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.
BofA will pay $2.43 billion, resulting in a litigation expense of $1.6 billion for the quarter ending September 30.
Research In Motion Ltd. (RIMM)’s sales of the BlackBerry smartphone trounced estimates last quarter as it gained ground in emerging markets, signaling that the company may still have a future in the age of the iPhone.
RIM shares jumped as much as 20 percent in early trading in New York after the company sold 7.4 million smartphones, about 500,000 more than analysts had projected. RIM also posted a narrower loss for the period than estimated and increased its cash holdings. That impressed some of RIM’s biggest critics — including shareholder Vic Alboini, who has previously demanded a shakeup in management and strategy.
Spanish stocks erased gains and led European stock markets lower on Friday, as investors got concerned Spain won’t ask for a bailout on the back of a 2013 budget deemed unrealistic by analysts.
The Stoxx Europe 600 index XX:SXXP -0.87% dropped nearly 1% to 269.16, on track to close the week 2.4% lower.
France’s socialist government has unveiled its harshest budget in 30 years, piling €20bn in new taxes mainly on big business and the wealthy as it stuck to its promise to hit its ambitious budget deficit target next year despite faltering growth.
The measures announced on Friday included the controversial 75 per cent marginal tax rate on earned income above €1m a year, put in place for two years.
But, as promised by President François Hollande, France was largely spared the kinds of hefty cuts in public spending, pensions and salaries imposed in other eurozone countries struggling to contain their sovereign debt.
Nevertheless, a freeze in nominal terms in government spending – excluding debt repayments and pensions – will save €10bn next year, in addition to the €20bn in new tax revenue. A further €2.5bn will be saved by limiting the rise in state health spending to 2.7 per cent and additional tax measures taken in 2012 will add another €4.4bn.
The government said the balance of tax and spending curbs would shift to 50-50 from 2014 after a ratio of two-thirds in tax and one-third in cuts next year.
Walgreen [WAG 36.60 ]– The drugstore chain reported quarterly profit of $0.63 per share, excluding certain items, seven cents above estimates. However, Walgreen did report a 1.3 percent drop in same-store front end sales, while same store prescription sales fell 12.8 percent.
United Technologies [UTX 78.35 ] – The Dow Jones Industrial Average component’s stock has been downgraded to “perform” at Oppenheimer, following the company’s analyst day. The firm said it’s no longer as enthusiastic as it once was about faster growth fueled by recent acquisitions.
Nike [NKE 96.00 ] – Nike reported fiscal first-quarter profit of $1.23 per share, 11 cents above estimates, with revenue also beating consensus forecasts. Nike did see gross margins decline by 80 basis points during the quarter, but future orders came in 6 percent above year-ago levels.
Finish Line [FINL 22.75 ] – The athletic gear company reported fiscal second-quarter profit of $0.49, five cents above estimates, with comparable store sales up 12.3 percent. Separately, Finish Line has struck a deal with Macy’s [M 37.51 — UNCH ] to become that retailer’s exclusive provider of athletic shoes.
Hartford Financial [HIG 19.30 ] – The company is selling its individual life insurance unit to Prudential Financial [PRU 54.82 — UNCH ] for $615 million in cash. Hartford’s stock had risen in Thursday trading on reports that the two sides were close to finalizing the deal.
Accenture [ACN 65.38 ] – Accenture earned $0.88 per share for its fiscal fourth quarter, matching Street estimates. The consulting firm also raised its semi-annual dividend by 15 percent to $0.81 per share.
Micron Technology [MU 6.015 ] – Micron reported a wider-than-expected fiscal fourth-quarter loss, due to lower selling prices for computer memory chips and difficult market conditions. The loss marked Micron’s fifth consecutive quarter in the red, and the company is planning to implement more cost cuts in 2013.
Facebook [FB 20.32 ] – Facebook is launching a new service called Facebook Gifts, its first move into electronic commerce. It’s designed to take advantage of the millions of users who post birthday wishes for their Facebook friends and gives them the ability to send gifts as well.
Sony [SNE 12.12 ] – The electronics maker has taken an 11 percent stake in troubled medical equipment and camera maker Olympus. The alliance will see Sony invest about $640 million and set up a joint venture in which Sony will hold a 51 percent stake.
Groupon [GRPN 4.78 ] – The daily deals maker has named its senior vice president of sales, Chris Muhr, as head of the Europe, Middle East, and Africa region, according to Reuters. At the same time, Senior Vice President Veit Dengler will be leaving the company. It’s the latest in a series of moves that have seen a number of key executives leave the company.
Nutrisystem [NTRI 10.66 — UNCH ] – Nutrisystem has extended the contract of outgoing CEO Joe Redling until Nov. 2, as it continues the search for his replacement. Redling had been scheduled to depart on Sept. 30 when his contract expired.
Amazon.com [AMZN 256.59 ] – Amazon is planning online wine sales, its second attempt at selling and shipping wine. Amazon abandoned a prior effort in 2009 after its venture partner experienced financial troubles.