Despite recession, companies are beating profit expectations

— -- 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.

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.

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.