Market Overview

Stocks Set to Open Higher as Europe Sees Slight Relief

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On Tuesday, stock futures pointed about 0.4% higher following Alcoa's (NYSE: AA) earnings report and an announcement that European politicians had moved closer to bailing out Spanish banks.

The Eurogroup said early Tuesday that it plans to extend the deadline to collect Spain's “excessive deficit” by another year, to 2014. About $37 billion is expected to be available to Spain's banks by month's end.

Stocks also were lifted by U.K. manufacturing activity that showed a surprsise 1.2% rise in May.

The euro was little changed against the dollar, still sitting near a two-year low.

U.S. stocks had lost ground for a third-straight day on Monday, and put volume was double the call volume, as rising Spanish borrowing costs soured recent European progress. The spread between German and Spanish government bonds remains near an all-time high.

China's imports increased 6.3% in June compared to the prior year, although that was against expectation that they would rise 11.3%, a discouraging sign for U.S. and European companies seeking to expand their businesses in the world's second-largest economy. Exports increased 11.3%, more than the expectations of a 9% increase.

Few U.S. economic releases are planned for Tuesday, with the exception of the June Small Business Index from the National Federation of Independent Business.

The S&P 500 remains hemmed in. It closed at 1352, below resistance at 1370 that is marked by a series of lower highs in May and July. The major support level remains near 1335, marked by the upward trendline from the June lows. Monday's decline did little technical damage on light volume, continuing a trend over the past month.

Strategist Jeffrey Saut said that the selloff on last week's poor jobs report did not ruin the technical picture for stocks. He believes that any pullback could be shallow – to the 1335 to 1345 level.

However, he still recommends buying equities that are not correlated with the rest of the market.

Stocks that may see action include:

Advanced Micro Devices(NYSE: AMD), which fell more than 3% after hours on Monday after warning of lower-than-anticipated revenue.

Google (NYSE: GOOG) is expected to pay $22.5 million to settle charges that it avoided preset customer privacy settings on apple's Safari browser, reports the Wall Street Journal.

Intel (NASDAQ: INTC) is expected to spend $5 billion for R&D to fund Netherlands-based ASML's (NASDAQ: ASML)next-generation chip designs.

Patriot Coal (NYSE: PCX), down 72% in Monday's trading following a Bloomberg report that it may file for bankruptcy.

PriceSmart (NASDAQ: PSMT) fell 5% after hours on Monday after reporting higher costs that ate into profits.

United Technologies (NASDAQ: UTX) announced a 5-year, $8.5 billion contract to build BlackHawk and Seahawk helicopters for the U.S. Army and Navy.

WD-40 Co. (NASDAQ: WDFC) fell 5% after hours on Monday after it warned of full-year European sales that could be flat or lower than they were the previous year.

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