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Updated from Nov. 8



) -- What's frustrating about chasing all these incremental headlines from Europe is that it's never quite clear how any of this seeming progress is going to help.

Take the situation in Italy on Tuesday. The

Dow Jones Industrial Average

was supposedly influenced throughout a choppy session by investors wondering whether Silvio Bersculoni was going to hang on as prime minister or not. The story seems to have

settled on Bersculoni agreeing to leave

if Italy's parliament passes the austerity measures being sought by the European Union.

The idea that this is really a bullish development for stocks is a reach, mainly because the details of said European Union plan are still a bit fuzzy, and the money to leverage up one super fund or another has yet to be found.

So in keeping with that sentiment, maybe it makes more sense to look for some takeaways from third-quarter earnings season.


weighed in on Tuesday, saying corporate profits were strong enough to boost its conviction that the U.S. economy will continue to enjoy slow growth and avoid sinking into recession.

"These results support our assumption for 2012 growth ramping down to ~2% US GDP and not a recession, favoring stocks with late-cycle weightings and higher earnings visibility," the firm wrote. "We expect volatility to remain high, but the industrial end markets appear to have sidestepped the worst of the summer's financial market disruptions."

Among the stocks that Citigroup tabbed at risk were names like

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, and

Illinois Tool Works

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, which the firm provided as examples of companies with the greatest exposure to Europe as well as the early stage of the economic cycle.

Citigroup also gave a few potential safe havens, singling out


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General Electric

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Roper Industries

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, and

Tyco International



"The best stock performers in 3Q11

the third quarter were those with the higher recurring revenue and U.S. exposure," the firm said, explaining the aforementioned companies share these characteristics.

As for Wednesday, Dow component

Cisco Systems

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reports its fiscal first-quarter results after the closing bell, and the average estimate of analysts polled by

Thomson Reuters

is for earnings of 39 cents a share for the three months ended in October on revenue of $11.03 billion. The stock is down roughly 10% so far in 2011 vs. a gain of more than 5% for the Dow overall.

Cisco is still in transition and Wall Street is split on the stock ahead of the report. Half of the 44 sell-side analysts covering the shares have ratings of strong buy (11) or buy (11), while the other half are at hold (19) or underperform (3). The median 12-month price target of $20 implies upside of 10% from current levels.

The actual earnings aren't usually the problem for Cisco as the networking equipment giant has beaten the consensus view in eight straight quarters. It's the guidance that usually gums up the works.


previewed the report on Tuesday, saying it expects an in-line quarter and "decent" guidance, but sticking with a hold rating and $15.75 price target. The firm said it's staying on the sidelines because the verdict on the company's turnaround efforts is still out.

"While the stock is fairly cheap, it's still early days in the company's restructuring efforts," Jefferies wrote. "Also, we expect that there's significant inertia in the business -- these types of turnarounds can take a long time. Lastly, the outlook for the business (and earnings power) can still get worse. We believe the company is bracing for more margin pressure down the road."

Jefferies said it looks like enterprise spending held up pretty well for Cisco during the quarter but its expectations for earnings of 37 cents a share on sales of $10.86 billion are below consensus. The firm is anticipating revenue growth in the low single digits going forward from Cisco. The current average analysts' estimate is for earnings of 42 cents a share in the January-ended quarter on revenue of $11.14 billion, a view that Jefferies is comfortable with.

"While the overall macro environment remains weak, the U.S. economy appears to be stabilizing a bit and European sovereign debt worries appear to have eased (at least for the time being)," the firm wrote. "We expect enterprise IT spending to continue on its slow march upward as a result, missing its typical calendar Q4 uptick. This, of course, will be offset by slower U.S. carrier capex spend in calendar Q4. In total, we expect Cisco to guide for revenue growth lower than typical seasonality, which implies Y/Y growth approaching the mid-single digits."

Wednesday's morning lineup of quarterly reports includes


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Computer Sciences Corp.



Dean Foods

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DG FastChannel



General Growth Properties




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Ivanhoe Energy



Liz Clairborne




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Maidenform Brands



Polo Ralph Lauren

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SodaStream International

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, and


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The late crowd features

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Advance Auto Parts

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Green Mountain Coffee Roasters







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Lions Gate Entertainment




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, and

Spreadtrum Communications



Meantime, it's another light day on data on Wednesday with the Mortgage Bankers Association's weekly application index at 7 a.m. EST, wholesale inventories for September at 10 a.m., and crude inventories for the week ended Nov. 5 at 10:30 a.m.

And finally, Tuesday's

after-hours action

featured a big drop for

Adobe Systems

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, which lost ground after announcing plans to eliminate 750 jobs, or roughly 8% of its work force, as part of a restructuring.


Written by Michael Baron in New York.

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Michael Baron


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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.