Slow Start Expected for Dow

LONDON -- The Dow Jones Industrial Average (INDEX: ^DJI) is expected to open slightly lower this morning, according to futures markets. Markets are likely to focus on corporate earnings today, with no major economic news due.

Earnings in the second quarter have proved better than expected according to data compiled by Bloomberg, which shows that 71% of the 110 S&P 500 (INDEX: ^GSPC) companies that have reported so far have outperformed analysts' forecasts. One exception was Microsoft, which reported its first ever quarterly loss as a publicly listed company last night. Google also reported after the bell last night, but with stronger numbers, so both of these stocks could be active when markets open this morning.

A number of major companies reported before markets opened this morning, with Baker Hughes, Schlumberger, Suntrust Banks and General Electric all reporting earnings that met or exceeded analysts' expectations. The picture was slightly less sunny at Xerox, which met expectations for Q2 but has issued negative guidance for Q3, saying that it expects a 7% fall in earnings per share over the next quarter.

In Europe, the Eurogroup of eurozone finance ministers is due to meet today to formally approve the 100-billion-pound bailout of Spain's indebted banking sector. European stock markets drifted lower this morning, but they remain on track to deliver a seventh consecutive week of gains. The FTSEEurofirst 300 opened this morning at its highest level since April, while the FTSE 100 (INDEX: ^FTSE) is also higher than it has been since the end of April.

In London, insurer Resolution proved to be the biggest drag on FTSE 100, losing 9% after it cancelled plans to return cash to shareholders this year. Another big faller was Vodafone, which fell 2% on heavy volumes after it announced a 7.7% fall in reported revenues in the first quarter, driven by weak eurozone trading and foreign exchange costs.

At the end of the morning session, the FTSE 100 was down by 0.6%, Germany's DAX by 0.5%, France's CAC by 0.7%, Italy's FTSE MIB by 2.2%, and Spain's IBEX by 1.9%. Spanish 10-year bond yields climbed above 7% once again this morning, while their Italian equivalents currently yield above 6%, both levels that are considered unsustainable in the longer term. The euro also continued its recent falls, dropping to $1.22 against the dollar.

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Roland Head owns shares in Vodafone but does not own shares in any of the other companies mentioned. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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