Stocks Face Early Bounce

Strong earnings and Cisco help stoke the bulls.
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Stocks perked up in Wednesday's premarket session as a bright outlook at

Cisco

(CSCO) - Get Report

gave bulls something to gnaw on.

Index futures recently showed the

S&P 500

trading 2 points above fair value, while the Nasdaq 100 was set for a 9-point gain. The 10-year Treasury bond was up 1/32 in price to yield 4.56%, while the dollar rose against the yen and euro.

Crude firmed after plunging more than $2 a barrel Tuesday. In electronic Nymex trading, the March contract was up 27 cents to $63.36 a barrel. An Energy Department report due later Wednesday is expected to show that crude inventories rose by 300,000 barrels last week while gasoline stocks rose by 1.9 million barrels, according to a

Reuters

survey.

Overseas markets were lower, with London's FTSE 100 recently down 0.3% to 5728 and Germany's Xetra DAX losing 0.4% to 5652. In Asia, Japan's Nikkei tumbled 2.7% overnight to 16,273, while Hong Kong's Hang Seng lost 0.9% to 15,373.

U.S. stocks fell Tuesday as the decline in crude sank energy shares. Since last Wednesday, the

Dow Jones Industrial Average

has shed 204 points, or 1.8%, while the S&P 500 is off 27 points, or 2.1%, and the

Nasdaq Composite

is down 66 points, or 2.9%.

Cisco's second-quarter earnings fell 2% from a year ago to $1.38 billion, or 22 cents a share, reflecting a stock-options expense. Adjusted earnings of 26 cents were a penny ahead of estimates, while sales of $6.36 billion matched estimates. CEO John Chambers said on a post-earnings conference call that second-quarter orders rose in the midteens, higher than expected, and the router maker left guidance for the third quarter intact.

Billionaire investor Carl Icahn laid out his long-awaited vision for

Time Warner

(TWX)

Tuesday night, recommending the company be split into four separate companies in an effort to unlock value. Icahn and several hedge fund allies control about 3.3% of the media company's shares. Time Warner executives told shareholders they plan to stick to their current strategy.

Another company where an asset separation is reportedly on the table is

Pfizer

(PFE) - Get Report

. Reports Wednesday said the drug giant is weighing the sale or spinoff of its over-the-counter drugs operation, a unit that did $14 billion in sales last year.

Cigna

(CI) - Get Report

said fourth-quarter profit fell 60% from a gain-swollen year-ago period to $224 million, or $1.78 a share, while adjusted earnings of $1.98 a share were 34 cents ahead of estimates.

PepsiCo

(PEP) - Get Report

said it earned 65 cents a share on sales of $10.1 billion in the fourth quarter, matching estimates on the bottom line and beating them on top. The company guided 2006 earnings in line with forecasts.