Companies on Tuesday continued posting second-quarter profits that topped analyst expectations.
The reports fostered a renewed sense of optimism in the market.
"This is the most solid evidence that we've seen that conditions are improving," said Jack Ablin, chief investment officer at Harris Private Bank, referring to the earnings reports.
Caterpillarcat, the world's largest maker of construction and mining equipment, said Tuesday its second-quarter profit tumbled 66% as the recession continued to erode sales of its machines and engines.
But the results blew past Wall Street's expectations and the company boosted its 2009 profit forecast, saying it is seeing signs of stabilization it hopes will lead to economic recovery. It also sees indications that government stimulus plans, particularly in China, "are beginning to work."
The company, a component of the Dow Jones Industrial Average, said its quarterly profit slid to $371 million, or 60 cents a share, for the three months ended June 30. That compares with $1.11 billion, or $1.74 a share, in the year-earlier period.
Revenue dropped 41% to $7.98 billion.
Excluding costs related to job cuts, Caterpillar earned 72 cents a share.
Analysts surveyed by Thomson Reuters, on average, had expected earnings of 22 cents a share on revenue of $8.86 billion. Those estimates typically exclude one-time items.
Coca-Colako, the world's largest beverage maker, posted a 43% increase in second-quarter profit, beating expectations as rapid overseas growth helped offset a sales decline caused by the stronger dollar.
Profit rose mostly because last year's quarter was dragged down by big restructuring charges and asset write-downs.
The seller of Coke, Sprite and VitaminWater said it earned $2.04 billion, or 88 cents a share, in the three months ended July 3. That's up from $1.42 billion, or 61 cents a share, a year earlier.
The company recorded significant one-time charges a year earlier that dragged down comparable profit 40 cents a share, compared with 4 cents a share in charges in the most recent quarter.
Excluding restructuring charges, write-downs and other items, Coca-Cola earned 92 cents a share in the most recent quarter. Analysts expected 89 cents a share.
Sales fell 9% to $8.27 billion, mostly hurt by the strong dollar. Wall Street's revenue estimate was $8.66 billion. Companies that do significant business overseas are hurt by a stronger dollar as sales revenue is translated from local currencies into fewer dollars.
Overseas, case volume grew 5%, including 33% growth in India and 14% in China. In North America, case volume fell 1% but Coca-Cola gained slightly in its share of sales volume. Sales volume of Coke Zero grew 24%.
The company is on track to save $500 million a year by 2011 through restructuring, CEO Muhtar Kent said in a statement. More than half of the savings would be achieved by the end of the year, Kent said.
Lower sales and restructuring charges helped drive chemical giant DuPont's dd profit down 61% in the second quarter, overshadowing a strong showing by its agriculture and nutrition business.
Its adjusted earnings still beat Wall Street expectations.
The chemical maker, one of the biggest in the U.S., called its performance solid given current economic conditions, and CEO Ellen Kullman said the company's efforts to reduce costs and increase productivity are paying off.