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Morning Stock Report

Futures dropped a few points as jobless claims were a bit higher than expected.

Chinese stocks rallied 4.5 percent overnight; other Asian markets also rebounded, but volume was seasonlly light.

Elsewhere:

1) What do you do when you have a government (China) that goes out and buys commodities with little regard to fundamentals of supply and demand?

If you're mining giant Rio Tinto, you wave a red flag: "We remain cautious about the recent rally in prices." They noted that much of the rise in prices was due to China's stockpiling of commodities.

They saw earnings drop 65 percent, largely because of lower commodity prices (while prices are off their February low, they are still for the most part well below prices of a year ago).

While Rio Tinto is often thought of as an iron ore company (and that is the majority of their earnings), they also are significant producers of aluminum, energy and minerals, and copper & diamonds.

2) Heinz Q1 profit dropped 7 percent, but results beat estimates on higher prices and effective cost controls. Sales fell 4.5 percent, but the decline was due to the stronger dollar, which cut the company's top line by 9 percent.

The condiment and food maker also reaffirms full-year guidance, with its sales growth forecast ahead of current Street expectations (+4 percent-6 percent vs. +2 percent est.).

3) Dick's Sporting Goods earnings beat Q2 estimates despite lower margins and a 4.1 percent decline in same-store sales.

Looking ahead, while the sporting goods retailer boosts its full-year same-store sales and earnings outlook, sales at stores open for at least a year are still expected to fall 4 percent-5 percent. Additionally, earnings in the third quarter are expected between $0.04-$0.07, topping estimates of $0.04.

4) After celebrating the fifth anniversary of its IPO yesterday, Google (GOOG) is up 1.5 percent pre-open on an upgrade at Goldman Sachs. Lifting the stock to a "conviction buy," Goldman sees stabilization in the search engine's ad rate declines and is optimistic in the company's European growth prospects. As a result, it expects Google's revenues to grow double-digits over the next 12 months.

5) Sears Holding falls 9 percent pre-open after posting a surprising Q2 loss (loss of $0.17 vs. consensus expectations of a gain of $0.35). Same-store sales fell 8.6 percent, largely led by the 13 percent decline at Sears department stores. Weakness in Sears stores was particularly driven by poor sales in home appliances and other areas sensitive to the struggling housing market.

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