Dow Chemical (DOW - option chain) shares rose Thursday after the company said it will sell its powder coatings business to Netherlands-based Akzo Nobel. Financial terms of the deal were not disclosed, but Dow said it will use the proceeds to reduce its debt. The move is part of Dow's plan to sell noncore assets in order to raise more than $3.5 billion. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DOW.

DOW opened Thursday morning at $28.20. In morning trading the stock has hit a low of $27.90 and a high of $28.88. As of 12:00, DOW was trading at $28.37 up 1.66 (6.2%). The chart for DOW looks neutral and S&P gives DOW a neutral 3 STARS (out of 5) hold ranking.

Pulling off mega deals is always tough. But in the case of Dow Chemical's (NYSE: DOW) acquisition of Rohm & Haas Co., the process was a rollercoaster. Struck before the financial system went into cardiac arrest last year, the transaction resulted in a lawsuit. The main reason was the implosion of Dow's joint venture with a Kuwaiti state-owned company.

Yet, Dow was able to resolve things, albeit with a complex arrangement. The new strategy involved preferred shares, new short-term financings and sales of various divisions, such as the unloading of the Morton Salt unit.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Baidu Inc. (NASDAQ: BIDU) reported better-than-expected Q1 earnings as revenues surged in the quarter.
• Burger King Holdings Inc. (NYSE: BKC) just beat Q3 expectations despite weak same-store sales growth.
• Corn Products International Inc. (NYSE: CPO) Q1 results were dragged down by higher corn costs.
• Dow Chemical Co. (NYSE: DOW) Q1 earnings sank on falling sales, job cuts and acquisition costs.
• Eastman Kodak Co. (NYSE: EK) reported a deeper-than-expected Q1 loss and suspended its dividend.
• Energizer Holdings Inc. (NYSE: ENR) posted better-than-expected Q2 earnings but revenue declined.

When is a 97% drop in profit not necessarily a bad thing? Well, when the company still manages to top expectations of course. This unlikely scenario has unfolded for Michigan-based chemical firm Dow Chemical (NYSE: DOW).

Let's deal with the 97% profit drop first. This massive fall was triggered by falling sales, job cuts and the company's acquisition of Rohm & Haas, a specialty chemicals firm that Dow took over.

Dow Chemical (NYSE: DOW - option chain) shares are headed higher today after the company closed its acquisition of Rohm & Haas. This allows DOW to announce today it plans to sell Morton Salt to German company K+S Aktiengesellschaft for nearly $1.7 billion. This will help DOW stabilize its finances, which were left in a lurch when Kuwaiti financing on the Rohm & Haas deal fell through. Left out in the cold in this deal is Compass Minerals International (NYSE: CMP), a salt company that had been expected to get a bid from K+S. If you think that DOW won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on that stock.

DOW opened this morning at $9.46. So far today the stock has hit a low of $9.25 and a high of $9.75. As of 12:05, DOW is trading at $9.69, up 88 cents (10.0%). The chart for DOW looks neutral and S&P gives DOW a 3 STARS (out of 5) hold ranking.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Akamai Technologies Inc. (NASDAQ: AKAM) earnings prospects garnered an analyst's upgrade.
• Applied Materials Inc. (NASDAQ: AMAT) warned of a loss for the quarter due to the economic slowdown.
• Burger King Holdings Inc. (NYSE: BKC) posted lower Q2 profit and revenue that missed estimates.
• Clorox Co. (NYSE: CLX) Q2 profit fell but beat estimates, and it reaffirmed its full-year guidance.
• Dow Chemical Co. (NYSE: DOW) swung to a Q4 loss and warned that low demand will continue.
• Hartford Financial Group Inc. (NYSE: HIG) posted a loss, cut its dividend, and offered weak guidance.

I wrote yesterday about the current, relatively low level of the CBOE Volatility Index (VIX), comparing it to the 2002 -2003 triple-bottom. I concluded that low levels after a bear market could indicate that a capitulation had occurred.

There was more evidence of that yesterday.

When the market opened sharply lower, the VIX opened very close to its intra-day high but sharply reversed and closed the day just .68 higher at 45.52. And the Dow and the S&P 500 traded fractionally lower.

This week should flush out most of any remaining bad earnings news with some very big names, such as Dow Chemical (NYSE: DOW), Disney (NYSE: DIS), Merck (NYSE: MRK) and Motorola (NYSE: MOT) reporting today.

If you've been watching earnings this past week, or if you read last week's Week in Preview, then this coming week may leave you feeling a bit like Bill Murray in Groundhog's Day. That is, again analysts surveyed by Thomson Reuters expect earnings declines to be more frequent and deeper than earnings gains.

Motorola Inc. (NYSE: MOT), Dow Chemical Co. (NYSE: DOW), Anadarko Petroleum Corp. (NYSE: APC), IAC Interactivecorp (NASDAQ: IACI), Moody's Corp. (NYSE: MCO), Elizabeth Arden Inc. (NASDAQ: RDEN), Devon Energy Corp. (NYSE: DVN), Diebold Inc. (NYSE: DBD), Tyco International Ltd. (NYSE: TYC), United Parcel Service (NYSE: UPS), Cisco Systems Inc. (NASDAQ: CSCO), Polo Ralph Lauren Corp. (NYSE: RL), ITT Corp. (NYSE: ITT), and Walt Disney Co. (NYSE: DIS) are scheduled to report quarterly results this week, and they're all expected to report double-digit declines in earnings.

But again this week, let's take a look who Wall Street feels may have done well in the past quarter.

Since July 11, the price of oil has fallen 25% from $147 to $110. This has been terrible news for holders of energy stocks -- which have nosedived. But for people who need to fill up their tanks, prices at the pump remain relatively elevated -- having fallen about 10% (I remember paying $4.11 at the peak and now pay $3.69 a gallon).

Meanwhile, the New York Times reports that companies using oil in their products are keeping their prices high despite the oil price drop. These companies seem to be acting in unison to raise prices -- suggesting there is not enough competition in their markets.

Which companies are raising prices still? Those who believe they can get away with it as they try to recoup the lost profit resulting from the recent increase in the price of oil -- which is an important raw material in their products..

• Procter & Gamble (NYSE: PG) increased prices to retailers up 7% to 10% "for items made with ingredients derived from oil to 'recover costs already incurred,'" according to a Times interview with its spokesman.
• Dow Chemical (NYSE: DOW) raised prices by 50% for the oil-based raw materials that go into diapers and polystyrene. It "does not want to give up those increases until the company recovers its old profit margins since '[its] prices continue to lag [its] cost increases,''" according to a Times interview with its spokesman.
• Goodyear Tire and Rubber (NYSE: GT) has raised tire prices by 15% and is "still making synthetic rubber tires from oil-based feed stocks bought at relatively high prices more than three months ago [and it] 'could not consider canceling the price increase until it knew whether oil prices were going to stay down,'" according to a Times interview with its spokesman.

DuPont (NYSE: DD), a competitor of Dow Chemical (NYSE: DOW), reported earnings for the second quarter today, and as Melly Alazraki stated in her Before the Bell article, agriculture helped drive results and earnings. Expectations were not just met, they were beaten by four pennies. The call was for $1.07 in earnings per share by analysts, and DuPont delivered, on an adjusted basis (excluding $0.07 related to a litigation benefit and a better tax rate), $1.11 per share. Last year at this time, DuPont reported $1.04 per share for the bottom line, giving the company about a 7% growth rate.

Shares are up as of this writing by a little under 2%. Not a bad increase considering DuPont is a stodgy Dow Jones component. But it's not exactly an exciting price rally, and it basically reflects my feelings for the earnings results. They were decent enough, but they weren't so overpoweringly good that I'd want to initiate a position in DuPont. And that's saying something, because the business is cheap on a forward-looking basis and from a dividend-yield point of view, in my opinion. DuPont thinks it can do somewhere between $3.45 and $3.55 per share for the fiscal year. With shares trading around $45, that gives the stock a decent valuation.

Yet, DuPont used cash for operations in its first six months, and capital expenditures have increased. Will the economy be kind to DuPont in the coming months? That's the wild card these days, the dreaded economy. Yes, DuPont may have done all right this quarter, but I don't need to buy it. I can look elsewhere for more compelling ideas.

Disclosure: I don't own any company mentioned; positions can change at any time.

Was the optimism observed in last week's preview post rewarded? Well, as it turned out there were few negative surprises from the companies listed there, really just Advanced Micro Devices Inc. (NYSE: AMD) and narrow misses from Google Inc. (NASDAQ: GOOG) and Microsoft Corp. (NASDAQ: MSFT).

Again this week, in a list of earnings expectations for some prominent companies in a variety of sectors, we see an apparent optimism. That is, analysts are anticipating more earnings growth than earnings declines.

Analysts surveyed by Thomson Financial expect the following companies to report a rise in earnings when compared to the same period of the previous year.

• Newmont Mining Corp. (NYSE: NEM): $0.48 EPS (50.0%) on sales of $1.5 billion (+15.7%)
• Amazon.com Inc. (NASDAQ: AMZN): $0.26 EPS (26.9%) on sales of $4.0 billion (+37.1%)
• Caterpillar Inc. (NYSE: CAT): $1.54 EPS (19.5%) on sales of $12.7 billion (+11.7%)
• McDonald's Corp. (NYSE: MCD): $0.86 EPS (17.4%) on sales of $5.9 billion (-1.5%)
• ConocoPhillips (NYSE: COP): $3.41 EPS (15.0%) on sales of $198.6 billion (+319.3%)
• Apple Inc. (NASDAQ: AAPL): $1.08 EPS (14.8%) on sales of $7.4 billion (+36.0%)
• Halliburton Co. (NYSE: HAL): $0.68 EPS (11.8%) on sales of $4.3 billion (+13.7%)
• Texas Instruments Inc. (NYSE: TXN): $0.46 EPS (8.7%) on sales of $3.4 billion (-1.1%)
• Yahoo Inc. (NASDAQ: YHOO): $0.12 EPS (8.3%) on sales of $1.4 billion (+10.5%)
• AT&T Inc. (NYSE: T): $0.76 EPS (7.9%) on sales of $31.2 billion (+5.7%)
• PepsiCo Inc. (NYSE: PEP): $1.02 EPS (7.8%) on sales of $10.5 billion (+9.4%)
• Anheuser-Busch Companies Inc. (NYSE: BUD): $0.93 EPS (6.5%) on sales of $4.7 billion (+4.2%)
• Pfizer Inc. (NYSE: PFE): $0.54 EPS (22.2%) on sales of $11.5 billion (+3.5%)
• 3M Co. (NYSE: MMM): $1.35 EPS (8.9%) on sales of $6.7 billion (+9.0%)
• Merck & Co. (NYSE: MRK): $0.83 EPS (1.2%) on sales of $6.0 billion (-1.2%)

TheStreet.com's Jim Cramer says its stunning buy of Rohm & Haas will get people thinking about an energy top.

Just when you thought it was safe to short anything, particularly anything with any commodity exposure, Dow Chemical (NYSE: DOW) (Cramer's Take) comes along and inexplicably pays a gigantic amount of money, $78 in cash, for Rohm & Haas (NYSE: ROH) (Cramer's Take)? My first thought was that it must be a joke. That is inconceivable. A hoax. Something perpetrated by frustrated longs to spook the shorts.

I mean, a chemical company? Two chemical companies? Ground Zero for slowing economic activity and raw costs? People unsure if Dow could even pay its nearly 5% yield? I mean, even last night on my show, I made fun of the idea that people are confusing Becton Dickinson (NYSE: BDX) (Cramer's Take), a medical supply company, with a chemical company because it uses resin.

Amazing.

Dow Chemical (NYSE: DOW) announced it will acquire Rohm and Haas (NYSE: ROH) for $78 per share.

DOW July option implied volatility is at 34; August at 41; above its 26-week of 30 according to Track Data, suggesting larger price movement.

ROH July and August option implied volatility of 38 was above its 26-week of 30 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

The Dow Chemical (NYSE: DOW) is capitalized at about $40 billion dollars and produces a multitude of household and industrial products that probably touch most Americans lives in some way. It is the largest chemical company in the U.S. and number two worldwide (ahead of ExxonMobil and behind BASF), and it is also a leader in performance plastics.

On May 18, 1897, Dow Chemical incorporated, based on Herbert H. Dow's plan to manufacture and sell bleach on a commercial scale. A year later they were in full-scale commercial production. The Dow-in-diamond mark was created to help resolve product shipping problems. In 1900, the Midland Chemical Company merged into Dow Chemical.

The company was always evolving under the guidance of Mr. Dow, who in 1913 announced the company would exit the bleach business to refocus to the value of chlorine as a raw material, prompting Dow stock to rise dramatically.

Paul Krugman's New York Times op-ed tries to defend his Princeton colleague, Federal Reserve Chairman Ben Bernanke. Krugman suggests that inflation is not a problem because he can't find any long-term labor contracts with 11% annual pay increases as in 1981's United Mine Workers contract.

Krugman gets himself into a weak position and he does not disclose his fealty to Bernanke whom he evidently does not believe can defend himself. It seems absurd to pretend that inflation is not a problem. Food prices have tripled and oil prices have doubled as Bernanke cut the Fed funds rate from 5.25% to 2%. Last week Dow Chemical (NYSE: DOW) announced a 20% price increase as did Eastman Kodak (NYSE: EK) in response to rising oil and other commodity prices. Huntsman Chemical (NYSE: HUN) announced a 25% price increase. And consumers -- who account for 70% of GDP growth -- expect inflation to rise at a rate of 7.7%.