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Macro View

With nothing major on the domestic economic calendar, headlines about Greece’s as-yet unsuccessful negotiations with its bondholders to restructure its private debt may get some traction. But today’s market action will be mostly about the slew of mixed earnings reports from a "who’s who" of corporate America. We also have President Obama’s State of the Union address later this evening.
 
We have 5 Dow components reporting results this morning, of which three came out with positive surprises, while two came up short. Johnson & Johnson came out with a positive EPS surprise on in-line revenue numbers. McDonald’s beat earnings expectations on roughly in-line revenue numbers. DuPont came out with a modest earnings surprise, though the chemicals giant’s top-line came short of expectations.

The company had lowered expectations last month, citing inventory destocking weighing on volumes. With the current Zacks Consensus EPS estimate for 2012 of $4.23 close to the lower end of the company’s guided range, this morning’s reiteration of that guidance is a net positive, in my view.
 
The Dow components missing this morning were Verizon and Travelers . Verizon’s miss by a penny reflected high expenses due to increased iPhone sales, though the company’s subscriber additions during the quarter came in at the high end of consensus expectations. Travelers missed, but provided a positive outlook for its business-insurance operation, its largest segment.
 
In other earnings reports this morning, Coach , the high-end handbag maker, came out with a positive earnings and revenue surprise. Harley-Davidson also reported a modest EPS and revenue beat. We have Apple and Yahoo reporting after the close today.
 
The overall mixed picture emerging from this morning’s reports from blue chip companies will likely give stocks a pause. The Greece headlines just add to that negative sentiment.

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