The second quarter earnings season is hitting high gear today with results pouring in fast and furious. The trend appears to be corporate earnings are beating analysts' lowered estimates but they're beating on the bottom line due to cost cutting. Revenues are generally missing estimates. Meanwhile on capital hill Federal Reserve Chairman Ben Bernanke is speaking before the House Financial Services committee in a two-day semiannual report on the economy. Overall the market rally has stalled as the S&P 500 struggles with resistance near the 950 level.

Asian markets were mixed. The Japanese NIKKEI was closed for business for a holiday yesterday. Today the NIKKEI is soaring with a 2.7% rally. The breakout over resistance at the 9600 level should bode well but the market tone seems nervous as Japan faces an election in August. The Hong Kong Hang Seng fought back from intraday losses to close unchanged. The Chinese Shanghai wasn't so lucky and posted its biggest loss in several weeks with a 1.6% decline.

The rally in Europe continues and stocks have stretched their gains to seven in a row. Credit Suisse gave the market a boost with an upgrade for stocks to an "overweight". Commodity-related stocks led the rally. The English FTSE rose 0.85%. The French CAC-40 gained almost 1%. The German DAX rose 1.27%. Meanwhile the euro turned lower as the dollar bounced back from six-week lows due to comments from Ben Bernanke.

Today launched a two-day semiannual meeting between Fed head Bernanke and congress. Ben was grilled over the Federal Reserve's exit strategy to avoid inflation and questioned over how and why the Federal Reserve should stay independent and whether it should become some sort of super-regulator for the markets and financial system. Bernanke said there were signs that the economy was "stabilizing" but essentially said we're not out of the woods yet and would keep rates low in the meantime. His comments fueled a rally in U.S. bonds, driving yields lower, and the U.S. dollar higher.

The earnings parade really picked up speed today with several Dow-components reporting their second quarter results. Caterpillar (CAT) made the biggest splash. The company smashed earnings estimates beating them by 50 cents with a profit of 72 cents per share. Revenues were down more than 40% and came in under expectations. CAT raised their 2009 earnings guidance and the stock soared this morning lifting the Dow Industrials. Yet a couple of hours later when the conference call began CAT's management warned that the third quarter could be extremely tough and that the company may actually lose money. Markets pared their gains on this news.

There are too many earnings reports to cover them all but some of the highlights are the following: Dow-component Coca-Cola (KO) beat estimates by 3 cents with a profit of 92-cents a share. Revenues missed analysts' estimates but the company's international sales drove the quarter's success. Dow-component Du-Pont (DD) beat Wall Street's estimates by 8 cents with a profit of 61 cents a share. Revenues dropped more than 22% and came in under estimates. Dow-component Merck (MRK) managed to beat estimates by 6 cents a share with a profit of 83 cents for the quarter. Revenues actually edged past estimates and the company reaffirmed their 2009 guidance. Dow-component UTX beat estimates by 17-cents with a profit of $1.21 a share but again revenues were under estimates. Furthermore UTX management warned that odds are not very good there will be any significant improvement in 2010. Lockheed Martin (LMT) reported a profit 7 cents better than expected but the stock is crashing on news that the Senate has raised enough votes to kill any further funding for the F-22 aircraft program. Shares are down more than 9% under $75.00. Printer and ink producer Lexmark (LXK) missed estimates by 5 cents with a profit of 55 cents a share and the company issued an earnings warning for the third quarter. Shares of LXK are down almost 20% near $15.00.

After the closing bell investors will be looking for earnings reports from Yahoo (YHOO) and Apple Inc. (AAPL). Estimates for YHOO are a profit of 8 cents a share. Estimates for AAPL are for a profit of $1.16 a share but whisper numbers are a lot higher. Currently analysts expect revenues around $8.18 billion for the quarter. The key metric to watch might be AAPL's gross margins. I would suggest using any post-earnings weakness as a bullish entry point.

In other corporate news Exelon has withdrawn its $7.4 billion deal to buy NRG Energy. Reuters said the deal, had it gone through, would have created the large power generator in the U.S. serving close to 45 million homes. Meanwhile the drama with CIT Group Inc. (CIT) is not over yet. Yesterday the big news was a $3 billion short-term financing deal to save the company from bankruptcy. Today CIT said that if not enough bondholders cooperate in their refinancing that they may have to file for bankruptcy anyway. Shares of CIT are down 19% at $1.00.

The rise in the U.S. dollar is weighing on commodities but oil has managed to buck the trend with its fifth gain in a row. The August crude oil futures expire after the close today, which could account for some of the volatility. Oil futures traded over $65.00 a barrel earlier this morning. Oil's strength might account for the relative strength we see in the OIX oil index and the OSX oil services index.

Currently the S&P 500 index is off less than two points at 950 and bouncing from its intraday lows of 943. The NASDAQ composite is down about two points at 1907 and rebounding from its morning lows. The Dow Industrials are up 32 points at 8880. The Russell 2000 is down less than four points at 523.

Let's take a quick look at charts for the major averages:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index: