A second week of earnings did little to clarify the market's direction despite quality reports out of a host of important American corporations. After another flat Monday, markets surged on Tuesday after a strong report from Apple boosted hopes for the consumer discretionary sector as well as the electronics market. However, Fed Chair Ben Bernanke gave his biannual testimony to Congress on Wednesday in which he called the outlook for America's economy "unusually uncertain." He also stated that the Fed was considering other measures in order to boost the economy such as removing the interest that banks receive from keeping deposits at the Reserve which pushed equities down sharply and reignited fears over a double dip. However, equities rebounded to finish the week strongly with shares opening higher on Thusday and posting modest gains on Friday after [General Electric] announced that it was raising its dividend by 20%, helping to alleviate ongoing concerns over the company's struggling capital division. This news helped to push the S&P 500 up by 30 points from its close on Wednesday to the end of trading on Friday to end another wild week on Wall Street [see Three ETF Ideas For The Third Quarter].

This week, earnings season continues with a special focus on energy and defense companies, which make up the bulk of the most important reports. Financials and biotechnology firms also look to be in focus with European banking giant Banco Santander reporting later this week, and pharma giants TEVA, Merck, and Amgen all reporting as well. While only one major central bank has a decision this week, there is no shortage of financial data which is scheduled to be released. The main focus looks to be a variety of CPI reports in a few key industrialized economies which should help to signal who is winning the inflation/deflation debate; Germany, Australia, and Japan are all slated to report their figures. Below, we profile three ETFs that look to be in focus over the next several days as the summer earnings season continues [for more ETF ideas, sign up for our free ETF newsletter].

iShares Dow Jones U.S. Aerospace & Defense Index Fund (NYSE: ITA)
Why ITA Could Be In Focus: Despite weakness in much of the economy, industrials have proven to be resilient with strength from companies such as 3M to Caterpillar. This trend continued with a quality report out of United Technologies Group (NYSE: UTX), which announced earnings of $1.20 a share and revenues of $13.9 billion compared to analyst estimates of a profit of $1.16 a share on revenue of $13.55 billion.

Given this bullish report from the largest component of ITA, the pressure will be on the rest of the sector to post similarly robust earnings. Among the companies reporting in the sector this week are Boeing, General Dynamics, Raytheon, Lockheed Martin, and Northrop Grumman, which are the next five largest components of the fund and combine to make up roughly 31.4% of ITA. The largest firm reporting this week is aerospace giant Boeing, which has finally gotten its flagship product, the 787 Dreamliner under control and looks to post earnings of $1.01 for the quarter. Should Boeing not be able to live up to expectations, it could signal a weak quarter for other aerospace-focused firms such as Lockheed and Northrop, which would erase the good news that UTX posted last week [see The Next Frontier For Aerospace and Defense ETFs].

iShares S&P Global Energy Index Fund (NYSE: IXC)
Why IXC Could Be In Focus: Thanks to the oil spill in the Gulf and weak economic growth which has kept a lid on the price of oil, it has not been a good quarter for much of the energy industry. This week looks to be especially crucial for the troubled sector as some of the biggest names in the industry report their quarterly earnings. Among the companies reporting include: ExxonMobil (NYSE: XOM), Chevron, Conoco Phillips, Total, and embattled oil giant BP (NYSE: BP). These companies are all in the top ten holdings of IXC and combine to make up 38.1% of the fund's total assets, suggesting that it could be a wild week for shareholders of this global energy fund.

Exxon is expected to report robust revenues that look likely to fall just under the $100 billion mark, but would still represent a 30% increase from last year. Analysts are looking for the largest oil company in the world to post earnings somewhere between $1.45-$1.55 a share. While BP only makes up roughly one-third of the allocation that XOM does in this iShares fund, investors will probably focus in on the British company and its report just as much as ExxonMobil's. Excluding oil spill charges, BP is expected to post earnings of $1.39 a share, up from $1.01 a year ago. However, the earnings are unlikely to be the focus for the company as investors grow increasingly concerned about how the company will pay for the spill. Additionally, reports are beginning to surface that CEO Tony Hayward is on his way out of the company and could be replaced as early as today or tomorrow [see Energy ETFs: Six Very Different Ways To Play].

iShares MSCI Spain Index Fund (NYSE: EWP)
Why EWP Could Be In Focus: For the past quarter, the Spanish economy has been on the brink of total collapse with budget deficits approaching double-digits and unemployment hitting 20%; the highest in the developed world. This sluggish economy looks to be especially in focus this week as EWP's top holding, Banco Satander, which makes up 23% of the fund, is scheduled to report earnings on Thursday. The bank has been under fire as of late and has seen its ADRs lose 7% so far this year. However, the bank has seen its shares soar in the past few weeks, and it passed the European bank stress tests with ease, posting tier one capital of 10% under the worst-case scenarios envisioned in the tests, well above the minimum required by regulators of 6%. Due to this strength and the company's wide geographic diversification, the bank looks to post decent earnings, which could help to cut into EWP's sharp year-to-date losses [see Hardest Hit Europe ETFs From The First Half Of 2010].

Last Week's ETFs To Watch:

PPH (NYSE: PPH): Despite a relatively solid week in the markets, big pharma fell sharply thanks to lowered guidance from [Johnson & Johnson (NYSE: JNJ)] and weak revenue growth from two other large pharma companies, Eli Lilly and Abbott Labs. Although JNJ reported solid sales, the company trimmed its earnings forecast for the rest of 2010 by 15 cents a share to $4.65-$4.75. The company also disclosed that it has received a grand jury subpoena over its many over-the-counter product recalls which could continue to impact future earnings. These negative reports sank the world's largest drug and consumer products company and pushed PPH down close to 2.5% on the week [see more fundamentals of PPH].

FAA (NYSE: FAA): The airline ETF took off last week, surging by more than 6.7% as several key components did, including some of the largest airlines such as United, Delta, Continental, and US Airways. Among these companies one of the biggest winners was UAL (Nasdaq: UAUA), the parent of United Airlines, which reported earnings of $273 million, the best result in almost three years, while US Airways saw its shares soar after reporting a 17% increase in revenue per available seat mile despite flat passenger volumes. "Corporate business is back. Oil has not gone back over $100 a barrel -- it's stayed in the low to mid-$70s," said Bob McAdoo, an airline analyst with Avondale Partners L.L.C. "Capacity increases have been limited. All the things are in place for the industry to be doing pretty well, and all of them should benefit about the same." [see more holdings of FAA here]

HHH (NYSE: HHH): Shares of HHH had quite the end to trading last week after staying flat Monday through Wednesday. Shares surged in between Wednesday and Thursday as eBay reported solid growth from its payment processing division. However, after the bell on Thursday, Amazon.com reported earnings and disappointed investors, causing HHH to tumble. Although the company grew revenues 41% and posted earnings that were sharply higher than last year, coming in at 45 cents a share compared to 32 cents last year, the company failed to meet estimates of 53 cents a share, which sent shares sharply lower in after-hours trading on Thursday. Yet the Internet HOLDR and Amazon.com proved to be very resilient, and HHH was able to make back all of its losses in Friday trading to finish the week even [see charts of HHH here].

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Disclosure: Eric is long ITA and XOM.

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