The futures were down earlier this morning and the word was that participants were bothered by an indication of contraction in a manufacturing index for China, the lack of closure on the debt limit negotiations in the U.S. and the Greek bailout solution in Europe, and an empty-hearted response to better-than-expected earnings news from the likes of Intel (INTC), Qualcomm (QCOM), eBay (EBAY) and American Express (AXP).

Now the futures are are up and the word is that participants are enthused by Express Scripts' (ESRX) $29.1 bln cash and stock offer for Medco Health Solutions (MHS), the White House's openness to a short-term debt extension, a headline out of the EU summit that indicates the European Financial Stability Facility would be able to intervene in the secondary markets to aid the ECB in helping countries like Greece, and better-than-expected earnings results from the likes of Morgan Stanley (MS) and Freeport-McMoRan (FCX).

Frankly, we're not too sure what to make of things this morning.  Earnings results overall have been very good, yet the smoke of debt issues in Europe and the U.S. has made it difficult for the market to see through to them.

The encouraging factor is that the earnings results have been good; otherwise, the market might have been pinned down more firmly by the uncertainty over dealing with debt matters here and abroad.

The overarching issue is that the U.S. still hasn't put forth an agreed-upon plan for raising the debt limit, although commentary from key officials has the market hopeful that the U.S. will ultimately avoid a default.  It is not done, though, until it is done, so the market still needs to respect the possibility that it does not get done in time.

Mindful of the last point, the equity market continues to chop around amid a lack of conviction by participants.

Today, with the S&P futures 0.7% above fair value, the market is projected to move higher at the open.  This opening indication seemed to firm a bit with the headline out of the EU summit, as the market looked past another disappointing initial claims report.

Specifically, initial claims for the week ending July 16 increased 10,000 to 418,000 (Briefing.com consensus 411,000).  The upside we suppose is that this is a better reading than the same week a year ago, which showed 466,000 initial claims.  The downside is that initial claims at the current level don't lend a lot of confidence to the idea that we will see strong nonfarm payroll growth in the July employment report -- and this is the survey week that factors into the employment report.

Continuing claims for the week ending July 9 decreased by 50,000 to 3.698 mln.  That was essentially in-line with the Briefing.com consensus estimate, but the high level of initial claims and the weak payroll growth would suggest the improvement in this series has more to do with claimants seeing emergency benefits expire than it does with them finding new positions.

The Philadelphia Fed Index for July (Briefing.com consensus 0.0; prior -7.70) and the Leading Indicators report for June (Briefing.com consensus 0.3%; prior 0.8%) will be released at 10:00 a.m. ET.

Until then, and until tomorrow, let the chop continue.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.