The stock market is set to open higher after Alcoa kicked off the second-quarter earnings season with better than expected results.

One hour before the week’s session begins, Dow futures are 64 points higher at 10,245 and S&P 500 futures are up 8.00 points to 1,080.00.

The 2-year Treasury note yield is 0.04 basis points higher at 0.657% and the benchmark 10-year Treasury note is 1.6 basis points higher at 3.083%.

The August delivery Fannie Mae 4.0 MBS coupon is -0-03 at 101-03 and the Fannie Mae 4.5 MBS coupon is -0-03 at 103-14.

Alcoa shares were up almost 5% in light of Monday’s late announcement that its net profit was $136 million, versus a loss of $454 million in Q2 2009.

Stocks have now been up for five straight days.

Key Events Today:

8:30 ― The Trade Balance is expected to produce a monthly deficit of $39 billion in May. That’s slightly narrower than the $40 billion in March or the $40.3 billion gap in April, when exports slipped 0.7% and imports fell 0.4%. The expected narrowing is mostly a result of petroleum imports, which were flat the prior month. 

“The U.S. trade deficit likely slipped below $40 billion for the first time in four months, receding from a 16-month high,” said economists at BMO Capital Markets. “Due to lower oil prices, imports likely declined somewhat more than exports ― which are feeling the effects of a firmer dollar. Though both imports and exports are expected to fall for the second straight month, this would follow strong upward trends in the past year (24% y/y and 20%, respectively).”

Economists at IHS Global Insight added that export and imports ex-petroleum should bounce higher after declining in April. 

“The underlying position is that both export and import growth are slowing after a very strong rebound that began in mid-2009, but exports are slowing more than imports, leaving trade as a net drag on GDP growth right now,” they wrote. “We expect trade to subtract 0.9 percentage points from second-quarter growth.”

2:00 ― The June Budget Statement from the US Treasury is anticipated to huge compared to historical averages. Economists are expecting a $70 billion monthly shortfall, versus a monthly average surplus of almost $17 billion over the past 10 years, according the Bloomberg data. The figures follow a May deficit of $135.9 billion.

Economists at Nomura put their faith in the Congressional Budget Office, which has estimated a monthly deficit of $69 billion in June. 

“Because its forecast has a remarkable record for accuracy, we believe that the actual number for June's budget deficit, which is released by the US Treasury, will be close to the CBO's estimates,” they wrote in a weekly note.

Treasury Auctions:

• 11:30 ― 4-Week Bills
• 1:00 ― 10-Year Notes