Morning Update

In the Green for the Opening Scene

Stocks are higher in early action, bucking a recent trend of early morning weakness, as traders mull over a plethora of earnings reports on Wall Street and overseas that are mostly better-than-expected. Exxon-Mobil missed on its earnings but reported sales that easily topped the consensus, Travelers Companies also missed on the bottom line, but premiums earned were steady and the newly-appointed Dow member raised its full-year profit guidance. Moreover, Dow Chemical reported an unexpected profit, and Motorola posted a narrower-than-expected loss. Sentiment was further supported by this week's weekly initial jobless claims report, which showed that although initial claims rose more than expected, key components of the report showed consecutive weekly declines. Treasuries are lower after the jobs data and the slew of earnings data. Overseas, markets are higher on upbeat earnings reports across globe.

As of 8:48 a.m. ET, the September S&P 500 Index Globex futures contract is 14 points above fair value, the Nasdaq 100 Index is 18 points above fair value, and the DJIA is 104 points above fair value. Crude oil is up $1.35 at $64.70 per barrel, and gold is up $4.64 at $934.64 per ounce.

Dow member Exxon Mobil (XOM $71) announced net income fell from $11.68 billion last year to $3.95 billion, resulting in 2Q EPS ex-items of $0.84, which missed the Reuters estimate of $1.02. But revenues of $74.5 billion came in above the $72.7 billion that the Street was looking for. The oil and gas firm was impacted by lower crude oil and natural gas prices as the global recession hampered demand for fuel.

Newly appointed Dow component Travelers Companies (TRV $43) announced 2Q EPS of $1.25, which was two cents below the Street's forecast, as net premiums at the insurer were flat versus last year at $5.4 billion, mostly matching expectations. The company said all of its operating dynamics were strong for the quarter and it was successful in achieving rate increases, offsetting lower coverage demands from existing policyholders due to the economic downturn. TRV raised its full-year EPS guidance.

Dow Chemical (DOW $20 ¹) posted an unexpected 2Q profit ex-items of $0.05, versus the Reuters estimate, which called for the company to post a $0.08 per share loss. Revenues fell 31% compared to last year, which missed the $13.3 billion average analyst forecast, but net sales were up 5% versus last quarter. The chemical firm said its better-than-expected earnings were driven by favorable volume trends, management's accelerated cost interventions and its ability to maintain price from the prior quarter.

Motorola (MOT $7) reported a 2Q net loss ex-items of $0.01 per share, which was narrower than the Street's forecast of a $0.04 per share net loss, as revenues came in at $5.5 billion, which was below the $5.6 billion forecast by analysts. MOT said its broadband mobility solutions continued to lead in key markets and delivered solid results in a very challenging economic environment.

Jobless claims rise, but shows multi-week drops in key components

Weekly initial jobless claims increased 25,000 to 584,000, versus last week's figure that was upwardly revised by 5,000 to 559,000. The Bloomberg consensus called for claims to reach 575,000. The four-week moving average declined for a fifth-straight week, falling by 8,250 to 559,000, to reach the lowest level since late January. Continuing claims declined for a third-consecutive week, dropping by 54,000 to 6,197,000, versus the forecast of 6,300,000. Treasuries are lower after the labor data.

Flurry of profit reports propel European stocks

Stocks in Europe are higher in afternoon action as traders digest a plethora of relatively upbeat earnings reports. Alcatel-Lucent (ALU $3) is up about 7% after the world's largest maker of fixed-line networks posted its first profit in 11 quarters, per Bloomberg, and BT Group (BT $19) is up close to 10% after the UK's largest fixed-line phone company posted better-than-expected top and bottom line quarterly results. Elsewhere, Europe's largest carmaker Volkswagen (VLKAY $68) is 5% higher after reporting a smaller-than-expected drop in profit, and AstraZeneca (AZN $46) is up solidly after the UK's number-two drugmaker announced 2Q earnings that topped analysts' expectations. However, all was not rosy on the European earnings front as BASF (BASFY $49)-the world's largest chemical maker-is under solid pressure after saying it expects a "significant" drop in sales and earnings this year, and Siemens (SI $80)-Europe's largest engineering firm-posted disappointing orders results for 3Q, and shares are lower. In M&A activity across the pond, Sanofi-Aventis (SNY $33) announced that it would buy the 50% of an animal health joint venture it does not own from Merck & Co. (MRK $30) for $4 billion.

Earnings support Asian advance

Stocks in Asia were mostly higher as earnings reports helped boost sentiment and China's Shanghai Composite Index rebounded from yesterday's steep drop-on concerns that the government may tighten monetary policy and as banks were reportedly capping 2009 lending targets-to close 1.7% higher. Automakers led Japan's Nikkei 225 Index 0.5% higher after Honda Motor (HMC $31)-Japan's second-largest carmaker-raised its full-year profit forecast after unexpectedly posting a 1Q net profit following yesterday's close, and Nissan (NSANY $14) reported a smaller-than-expected 1Q net loss. Shares of Honda were up 9% and Nissan jumped about 10%. Elsewhere, Mitsubishi Electric (MIELY $65) soared about 15% after the industrial conglomerate posted a narrower-than-expected quarterly loss on favorable sales of heavy equipment. Meanwhile, after the closing bell, Sony Corp (SNE $25) posted a smaller-than-expected loss. Despite the sharp pressure on commodities yesterday, stocks in resource rich Australia rose 1.2% on strength in financials following some positive analysts' recommendations in the group.