The Dow Jones Industrials (DJINDICES:^DJI) were dropping moderately early Friday, as investors struggled to get their bearings as the second-quarter earnings season begins in earnest. Yesterday's European confusion continues to weigh on market sentiment, as early gains for European markets largely evaporated late in their respective trading days. U.S. investors aren't certain whether the episode will fade into insignificance or prove to be the precursor to a much more extensive problem for the global markets. Nevertheless, the Dow was down 26 points as of 11 a.m. EDT, with gains from Verizon Communications (NYSE:VZ) and other index components failing to offset losses from Chevron (NYSE:CVX) and the majority of Dow stocks.

Source: Verizon Wireless.

Verizon gained about 0.8% as the stock continued to respond favorably to positive comments from CEO Lowell McAdam about the wireless provider's performance over the past few months. Verizon made a huge bet on the U.S. wireless market by taking full control of its Verizon Wireless division, and that move appears to be paying off. According to preliminary figures from the company, Verizon added more than 1.4 million subscribers during the second quarter, with the Dow component seeing substantial growth in popular mobile devices including tablets and smartphones. Even more important for Verizon's long-term prospects, though, were comments that the company has managed to keep its margins up. Many investors worried that a price war started by some of the smaller players in the U.S. wireless-network market might force Verizon and its main telecom rival within the Dow Jones Industrials to match discounts and other price promotions, potentially hurting their profit margins and beginning a race to the bottom from a net-income perspective. The fact that Verizon hasn't seen those effects is a strong sign of health in the industry, and it could help drive the company's profits higher for the foreseeable future.


Meanwhile, Chevron fell more than 1.3%. Energy stocks have been relatively weak throughout the past few weeks as investors consider the impact on the global economy of conflict in Iraq and high prices for refined products such as gasoline. Chevron specifically issued its interim second-quarter results last night, and the news once again showed some of the challenges the oil giant has on the production side. Chevron expects overall production to fall both year over year and from the first quarter, with gains on the domestic production front more than offset by falling production levels internationally. In Chevron's downstream segment, refining margins grew during the quarter, but planned activities resulted in lower production volume and higher operating costs. Overall, Chevron expects better earnings, but one-time factors played a big part in that and therefore didn't motivate investors to get bullish about the stock.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Compare Brokers