Opening View: Futures Point Higher as Investors Look for Cues from Earnings

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U.S. stocks are higher this morning, bolstered by promising news out of Greece, and a round of upbeat earnings reports from several major U.S. players. Investors are celebrating news that Greece has finally agreed to a second rescue plan to prevent a widespread European contagion. Now the focus is once again on the U.S., as a recent Wall Street Journal report suggested that President Barack Obama and House Speaker John Boehner are close to reaching a settlement on the domestic debt situation. Meanwhile, with no major economic reports on today's agenda, investors are looking for positive cues from the day's slew of earnings. Amid this backdrop, futures on all three major indexes are pointing slightly higher.

Dow, S&P and Nasdaq futures

Dow heavyweight General Electric Company (GE - 19.16) boasted a 21.6% rise in profit, as demand increased for its heavy jet engines and electric turbines. More specifically, second-quarter profit arrived at $3.69 billion, or 35 cents per share, compared with $3.03 billion, or 28 cents per share, a year earlier. Excluding items, GE's second-quarter profit was 34 cents per share, surpassing analysts' predictions for 32 cents per share. Revenue fell 3.5% to $35.63 billion, due to the company's sale of its majority stake in NBC Universal. This figure also topped analysts' estimates, which called for revenue of $34.7 billion. Ahead of the open, GE is trading 0.7% higher.

Dow peer Microsoft (MSFT - 27.09) reported a fiscal fourth-quarter profit of $5.87 billion, or 69 cents per share -- up 30% from its year-ago earnings of $4.52 billion, or 51 cents per share. Revenue, meanwhile, climbed 8.3% to $17.37 billion. Analysts, on average, had expected the blue chip to record a profit of 58 cents per share on sales of $17.23 billion. However, while its Xbox unit saw revenue grow a record 30% to $1.5 billion, sales of Windows fell for a second straight quarter.

Schlumberger Limited (SLB - 90.96) said this morning that its second-quarter net income rose 64% to $1.34 billion, or 98 cents per share, up from $818 million, or 68 cents, a year ago. Earnings from continuing operations were 87 cents per share, while revenue increased to $9.62 billion. Both figures exceeded analysts' predictions for a profit of 85 cents on $9.19 billion of revenue. SLB attributed the positive results to strong worldwide growth, as all of its product groups posted double-digit revenue rises. Ahead of the open, the oil issue is up over 2%.

Advanced Micro Devices (AMD - 6.50) said it swung to a profit of $61 million, or 8 cents per share, in the second quarter, compared to a loss of $43 million, or 6 cents per share, a year prior. On an adjusted basis, AMD said it earned 9 cents per share, beating the Street's forecast by a penny. Revenue for the quarter came in at $1.57 billion -- down from its year-ago revenue of $1.65 billion, and just shy of analysts' projections for sales of $1.58 billion. Looking ahead, the company said it expects revenue to grow 8% to 12% sequentially -- or to a range of $1.73 billion to $1.76 billion. Analysts, on average, recently forecast third-quarter sales of $1.7 billion.

For its second quarter, SanDisk Corp. (SNDK - 41.57) reported net income of $248 million, or $1.02 per share, compared to a profit of $258 million, or $1.08 per share, a year earlier. On an adjusted basis, SNDK earned $278 million, or $1.14 per share, on record revenue of $1.37 billion. The results handily topped Wall Street's expectations for a per-share profit of 99 cents on sales of $1.34 billion.

Earnings Preview

Today's earnings docket will feature reports from Caterpillar ( CAT ), Honeywell ( HON ), Verizon Communications ( VZ ), Xerox ( XRX ), and Reynolds American ( RAI ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports scheduled for today.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,433,309 call contracts traded on Thursday, compared to 817,220 put contracts. The resultant single-session put/call ratio docked at 0.57, while the 21-day moving average remained at 0.63.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Asian markets ended higher today, lifted by news of an aid package for Greece worth 109 billion euros. In fact, euro zone heads of state pulled together a plan to prevent the further spread of the debt crisis, with the European Financial Stability Facility (EFSF) now empowered to lend money to governments and intervene in secondary markets. Traders cheered these major developments, but the gains were relatively modest in mainland China, where concerns about slower economic growth continue to linger. By the close, Hong Kong's Hang Seng added 2.1%, South Korea's Kospi and Japan's Nikkei added 1.2% apiece, and China's Shanghai Composite tacked on 0.2%.

Banks are leading the gains in Europe, as traders breathe a sigh of relief over the comprehensive bailout plan cobbled together by euro-zone leaders. However, the optimism has been somewhat muted by a downbeat reading from the IFO business climate index, as well as a warning from Fitch that the Greek bailout plan constitutes a restrictive default. At last look, the French CAC 40 and London's FTSE 100 are both 0.9% higher, while the German DAX is up 0.6%.

Overseas markets

Currencies and Commodities

Crude futures have continued to blaze a steady path higher, fueled by upbeat news about the Greek debt situation, as well as Thursday's announcement that the IEA would not be releasing additional stockpile reserves. Amid this backdrop, crude is trading 0.1 point, or 0.1%, higher, at $99.27 per barrel. Elsewhere, the dollar has gained ground against its rivals -- specifically the euro -- as investors have moved past the Greek debt situation, to focus on other issues in the euro zone. Ahead of the open, the U.S. dollar index is up 0.07 point, or 0.1%. Finally, gold futures are also trading higher this morning, up 10.2 points, or 0.6%, to hover around $1,597.20 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: CAT , HON , RAI , VZ , XRX

Schaeffer's Investment Research

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