Corporate America has buoyant secondquarter

New York &endash; Corporate America rode a second-quarter profit wave that produced the first double-digit growth in nearly two years. According to Reuters with results of 95% of the companies that make up the Standard & Poor's 500-stock index in, year-over-year earnings growth averaged 14.7%, excluding what most analysts considered one-time events, according to First Call/Thomson Financial, which tracks corporate earnings. The final tally is likely to be about 15%, First Call said, the first double-digit growth since the third quarter of 1997. The long-term yearly growth average is about 7%, while in the 1990s it was closer to 12%. Particularly noteworthy, analysts said, is that two-thirds of the companies' earnings beat expectations.

"We've had very good earnings surprises from the S&P 500, primarily due to better-than-expected results overseas and in the commodities area and also from some tech companies," said Joseph Abbott, US equity strategist for I/B/E/S International, which also tracks earnings. Technology and consumer cyclical companies in the S&P 500 posted the greatest growth in the quarter, First Call said. Technology giants like Microsoft Corp. , Lucent Technologies Inc. , Texas Instruments Inc. and even Intel Corp. , which fell short of estimates, grew earnings by more than 50%.

Only two sectors posted year-over-year declines. Energy company earnings fell, though less than in the prior two quarters, as the price of oil has rebounded after bottoming out in February.

Producers of basic materials like metals and chemicals also fell from last year, suffering from decade-low commodity prices caused by oversupply. Last year's overall earnings were easy to beat, as they were weighed down by troubled Asian economies and poor results stemming from a prolonged strike at General Motors Corp. , a massive inventory glut in the personal computer business, and depressed oil prices.

Even so, few say that earnings have peaked in the second quarter, particularly given the soft comparisons even more companies will experience in the third quarter. It was in that period last year that many companies felt the full crunch from a global economic and financial downturn. First Call predicts that S&P 500 earnings growth will reach 21% in the third quarter, then start to taper off in the fourth quarter of 1999, with full-year growth around 16%, the strongest since the 18.5% growth of 1995. S&P 500 earnings beat analysts' estimates by an average of 4.1%. Final results are expected to beat the estimates, First Call said, because companies typically guide analysts toward estimates they believe they can meet or exceed, a practice rewarded by Wall Street.

However, more companies beat estimates in the recent quarter than the 2.6% five-year average. Despite the strong results stocks have lost ground during the earnings reporting period as interest-rate jitters overshadowed profits. "Increasing interest rates swung the price-to-earnings ratios pretty dramatically and took Wall Street's eye off of the earnings picture," said Alan Skrainka, chief market strategist for Edward Jones & Co., the St. Louis-based broker-dealer.