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Pre-Market Primer: Super Mario to Europe's Rescue, Zynga Hobbles Facebook Shares


Mario Draghi is willing to do what it takes. If you won't buy Spain's bonds, he will. Probably.

MINYANVILLE ORIGINAL Global stocks rose today after European Central Bank President Mario Draghi made statements that seem to indicate that the central bank is willing to restart a bond-buying program or give the European Stability Mechanism a real banking license to act as a true lender of last resort.

"To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate," Draghi said at the Global Investment Conference in London. "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough. There are short term challenges, to say the least."

Analysts are taking this to be more than the usual talk from Euro officials. The euro jumped 0.86% on the dollar to $1.2262 and Spain's 10-year bond yields fell more than 36 basis points from 7.425% to 7.012%.

European stocks also rallied with the FTSE (^FTSE) up 1.05% and the CAC 40 (FCHI) up nearly 3%. Hints that "Super Mario" is willing to take on high sovereign yields also sent US stock futures higher. Dow (^DJI) futures gained 0.98% to 12,761.00, S&P 500 (SPY) futures climbed 1.28% to 1,352.00, and Nasdaq (^IXIC) futures rose 1.40% to 2,579.00.

Initial claims for unemployment insurance fell to 353,000 last week from a revised 388,000 the week prior. This could be another symptom of seasonal adjustment error. Auto plants usually shut down temporarily in mid-summer, but this change is less pronounced this year. A separate report showed that durable goods orders rose 1.6% in June after a 1.1% gain in May. Excluding transportation, orders actually fell 1.1%.

In earnings news, Visa (V) shares rose after the payment processor reported better-than-expected earnings, adjusted for the $4.1 billion settlement with vendors.

Sprint (S) reported an unexpected $1.4 billion, or $0.46 per share loss for the second quarter this morning despite revenue rising 6% to $8.8 billion. Sprint is in the process of updating its network to Long Term Evolution, technology that AT&T (T) and Verizon (VZ) already offer.

Exxon Mobil (XOM) beat earnings expectations with $3.41 per share on $127.36 billion, up from $2.18 per share and $125.49 billion in the year-earlier period.

Facebook (FB) will report after the bell. Zynga (ZNGA), the online game company with very close ties to the social network, reported a disastrous second quarter yesterday. Zynga earned $0.01 per share on $332 million in sales, excluding one-time costs. Part of the blame goes to Facebook's tweaks to game content, but mobile gaming is also proving difficult for Zynga to monetize. Shares of Zynga dropped more than 40% and Facebook shares dropped 5.83%. Amazon (AMZN) and Starbucks (SBUX) will also report after the bell.

Twitter: @vincent_trivett
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