Opening View: Futures Mixed Ahead of Debt Deadline, Earnings

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Late last night, President Barack Obama interrupted regular televised programming to discuss the current debt gridlock in the U.S. During his speech, Obama expressed confidence that lawmakers will likely reach an agreement on the debt ceiling by the Aug. 2 deadline. The President also praised a plan proposed by Democrats, and called for a compromise on cutting the deficit and raising the debt ceiling over the next few days. Conversely, House Speaker John Boehner said Congress should back a rival plan proposed by the Republicans. The clock is ticking -- just days are left before the U.S. begins defaulting on its debt obligations.

However, the show must go on -- the earnings show, that is. A slew of big-name equities take the earnings spotlight today, including Dow heavyweight 3M ( MMM ), Internet bigwig Amazon.com ( AMZN ), and financial hotshot CIT Group ( CIT ). Amid this backdrop, futures are mixed, with the Dow Jones Industrial Average (DJIA) lingering about 24 points below fair value, while the broader S&P 500 Index (SPX) is trading two points higher.

Dow, S&P and Nasdaq futures

Netflix, Inc. (NFLX - 281.53) posted a second-quarter profit of $68.2 million, or $1.26 per share -- up 57% from a year earlier. Revenue, meanwhile, increased 52% to $788.6 million. Analysts, on average, were calling for a per-share profit of $1.11 on sales of $791.5 million. The company's closely watched subscriber-acquisition costs declined a year-over-year 38% in the U.S., though they rose 4.9% sequentially. Looking ahead, the firm forecast current-quarter earnings of 72 cents to $1.07 cents per share -- short of the per-share profit of $1.09 expected on the Street.

Broadcom (BRCM - 34.91) reported net earnings of $175 million, or 31 cents per share, compared to the $278 million, or 52 cents per share, earned a year earlier. On a non-GAAP basis, net income came in at $418 million, or 72 cents per share, while revenue rose 12% to $1.74 billion. Analysts were anticipating an adjusted quarterly profit of 64 cents per share on sales of $1.8 billion. For the current quarter, BRCM forecast revenue of $1.9 billion to $2 billion, compared to Wall Street's projected sales of $1.93 billion.

Texas Instruments (TXN -31.47) reported a second-quarter profit of $672 million, or 56 cents per share, compared with a profit of $769 million, or 62 cents per share, for the year-ago period. Revenue fell slightly to $3.46 billion from $3.5 billion. Analysts had expected the chip company to report earnings of 54 cents per share on revenue of $3.44 billion. For the third quarter, the company said it expects revenue in the range of $3.4 billion to $3.7 billion, and earnings of 55 cents to 65 cents per share. Analysts, on average, were calling for a current-quarter profit of 64 cents per share on sales of $3.63 billion.

Oil baron BP plc (BP - 46.77) said Tuesday that its second-quarter net profit arrived at $5.62 billion -- a far cry from last year's oil-spill induced loss of $17.2 billion. Total revenue for the quarter was up 39% to $103.84 billion, while earnings were 29.39 cents per share. The firm also predicted the momentum of its recovery to build into 2012 and 2013. Nevertheless, these results failed to impress the Street, which was looking for a much higher profit of $1.96 per share. BP is down 2.4% in pre-market trading.

Earnings Preview

Today's earnings docket will feature reports from 3M Company ( MMM ), Amazon.com ( AMZN ), Ford Motor ( F ), GlaxoSmithKline ( GSK ), AK Steel (AKS), U.S. Steel (X), ARM Holdings (ARMH), Biogen Idec (BIIB), CIT Group ( CIT ), JetBlue Airways (JBLU), Juniper Networks (JNPR), Regions Financial (RF), and Under Armour (UA). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with new home sales for June, the S&P/Case Shiller 20-city home price index for May, and the Conference Board's consumer confidence index for July. Wednesday features the Federal Reserve's Beige Book, along with June's durable goods orders and the regularly scheduled weekly report on petroleum inventories. On Thursday, we'll hear the usual update on weekly jobless claims, as well as pending home sales for May. The week's marquee economic report -- the advance estimate of second-quarter gross domestic product (GDP) -- hits the Street on Friday. Also on the day's docket are the Chicago PMI and the final Reuters/University of Michigan consumer sentiment index for July.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 870,604 call contracts traded on Monday, compared to 528,908 put contracts. The resultant single-session put/call ratio docked at 0.61, while the 21-day moving average remained at 0.63.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia ended higher today, as traders looked past the U.S. debt standoff to a round of solid earnings reports. Companies such as Canon and Kao Corp. gained ground on the heels of their respective quarterly results, with both firms bouncing back impressively from quake-related disruptions. In Korea, brokerage firms were boosted by deregulation efforts, while railroad stocks continued to lag in China following a deadly weekend crash. By the close, Hong Kong's Hang Seng rose 1.3% and South Korea's Kospi added 0.9%, while Japan's Nikkei and China's Shanghai Composite each tacked on 0.5%.

On the other hand, lackluster earnings are keeping European stocks close to the breakeven line at midday. Traders are digesting disappointing reports from banking issues UBS and Deutsche Bank, as well as commodity giant BP plc and tech firm STMicroelectronics. Meanwhile, familiar debt woes were reignited after an Italian debt auction revealed rising yields. At last check, the French CAC 40 is off 0.4%, London's FTSE 100 is down 0.2%, and the German DAX is up 0.1%.

Overseas markets

Currencies and Commodities

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: AMZN , CIT , F , GSK , MMM

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