Stock Market Today: Futures Recover as Wells Fargo Meets Estimates, Portugal Fears Subside

NEW YORK (TheStreet) -- U.S. stock futures were higher Friday as European markets recovered from a bout of market contagion fears that were sparked by a missed debt service payment by a parent company of Portugal's Banco Espirito Santo.

Portugal's second-largest bank by market value on late Thursday reassured the markets that potential losses resulting from its exposure to Espirito Santo Group will not compromise its compliance with regulatory capital requirements. Currently it has an exposure of 1.18 billion euros to Grupo Espirito Santo.

Dow Jones Industrial Average futures were rising 26 points, or 26.93 points above fair value, to 16,868, with the index on the verge of crossing the 17,000 psychological threshold once again. S&P 500 futures were up 3.25 points, or 2.97 points above fair value, to 1,961. Nasdaq futures were climbing 11.7 points, or 12.71 points above fair value, to 3,885.5. U.S. markets climbed out of session lows by market close Thursday, but stayed in the red for the day.

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"The equity market remains remarkably resilient, in our view, with the S&P 500 up 6.2% so far this year," noted Gina Martin Adams, senior analyst at Wells Fargo Securities. "As the market continues to normalize with the deceleration in Fed intervention, we continue to believe dispersion among sectors should rise," she added. Adams sees breakouts in integrated the oil and gas, and tobacco sectors; a breakdown in banks; and a break-up in Internet stocks.

With the markets stable in the face of contagion fears, investors are now looking to second-quarter earnings season for the next set of potential catalysts. S&P Capital IQ reported that S&P 500 earnings growth is expected to come in at 6.5% year ove -year, with EPS of $28.67 for the second quarter. Only 25 companies have reported earnings results for the second quarter so far, with 16 of those companies beating analysts' estimates, seven missing, and two meeting.

Wells Fargo (WFC), the nation's largest mortgage lender, posted on Friday in-line second-quarter earnings of $1.01 a share on better-than-expected revenue of $21.1 billion. The Wall Street revenue consensus target was $20.84 billion. The banking giant reported total average loans of $831 billion, up $32.7 billion or 4%, from the 2013 second quarter and noted that it increased its quarterly common stock dividend by 17% to 35 cents a share in the second quarter.

Shares were off 0.42% in premarket trading.

Other companies taking the spotlight include Alibaba, Reynolds American (RAI) and Lorillard (LO), Amazon.com (AMZN), and Chevron (CVX).

Alibaba, the Chinese e-commerce company, plans to launch its IPO process as soon as the end of the month, people familiar with the matter told The Wall Street Journal. Reynolds American and Lorillard are closing in on a complex merger. Amazon.com is seeking permission from U.S. regulators to test its delivery drones near Seattle, Reuters reported. Chevron said earnings for the second quarter are expected to rise from the first quarter because of gains on asset sales.

-- By Andrea Tse in New York

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