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Friday Stress Test: Spain is First in Line on Euro Test

Lots of rumors are going around about Spain with El Mundo stating that 5 Spanish Cajas will fail the stress test.  meanwhile the market is holding it's own as we head into mid day Friday trading.  The summer markets are whip sawing around and earnings is the driver at the moment with positive numbers coming across the board, but it seems like we will shift to Euro Stress test in upcoming trading.

(NYSE:AP) -- Stocks wavered in a tight range Friday as investors sorted through the latest batch of earnings looking for clues about economic growth. Investors were also trading cautiously as they waited for a report on European banks.

Earnings reports were more mixed than on Thursday, when upbeat news on corporate results sent stocks sharply higher. The Dow Jones industrial average rose 26 points a day after climbing 201.

Verizon Communications Inc., Ford Motor Co., Microsoft Corp. and American Express Co. all reported earnings that topped forecasts. Their results also showed that businesses and consumers are increasing their spending as the economy recovers.

Verizon added more new wireless customers during the second quarter than its top rival, AT&T Inc. Ford's sales jumped 28 percent in first half of the year, nearly double the pace of the industry. And American Express said customers are spending close to pre-recession levels, a sign that shoppers are gaining confidence in their personal finances.

Among the disappointments, Inc. missed profit forecasts when it reported after the market closed Thursday. The online retailer's expenses jumped sharply, which concerned traders.

Energy services company Schlumberger Ltd. reported a big jump in profit, but its earnings appeared to be more affected than competitors like Halliburton Co. by the ban on deep water drilling in the Gulf of Mexico.

In late morning trading, the Dow Jones industrial average rose 26.11, or 0.3 percent, to 10,347.27. The Standard & Poor's 500 index rose 1.53 or 0.1 percent, to 1,095.20, while the Nasdaq composite index fell 0.07, or less than 0.1 percent, to 2,245.82.

Rising stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 199 million shares.

Verizon rose 96 cents, or 3.6 percent, to $27.96. Ford jumped 43 cents, or 3.6 percent, to $12.52. American Express rose 40 cents to $43.59, while Microsoft fell 14 cents to $25,70. Amazon dropped $8.36, or 7 percent, to $111.71. Schlumberger fell $1.64, or 2.7 percent, to $59.66.

The mixed trading also comes before European regulators release results of so-called "stress tests" on banks, which are designed to predict whether banks could survive a downturn in the economy. The tests could remove some uncertainty about whether rising government debt in many European countries is hurting financial companies. The continent's debt problems have sent stocks falling since April amid concerns they could slow the global economic recovery.

"Everybody's waiting for the stress tests," said David Chalupnik, head of equities at First American Funds.
Chalupnik said the credibility and criteria of the tests will be more important than the results. Investors want to make sure the tests were rigorous enough to show which banks would struggle during a potential slowdown, he said.

Bond prices traded in a tight range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.95 percent from 2.94 percent late Thursday.

European markets were mixed ahead of the stress test results, which will come out after markets there close for the weekend. German shares rose after a closely watched business climate index rose unexpectedly for the fifth straight month.

Germany's DAX index rose 0.3 percent, Britain's FTSE 100 dipped 0.2 percent, and France's CAC-40 rose 0.1 percent. Japan's Nikkei stock average jumped 2.3 percent.

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