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Stocks have help up quite well in recent days despite the continued run of soft economic readings and lack of visibility on the QE question. Expectations for second quarter GDP growth coming out next week have been steadily coming down in recent days and currently stand below 1.5%, with quite a few forecasts significantly lower than that.

What seems to be keeping investors reassured is the second quarter earnings season, which has turned out to be a lot less worrisome than many suspected just a few days ago. Expectations had come down sharply as this quarter’s busy pre-announcement season painted a dark picture for corporate earnings, particularly given all the global growth questions swirling around. But the actual results have turned out to be quite decent – not strong or good, but not bad either. And that has to count as a positive in these otherwise grim times.

Results from the 120 companies in the S&P 500 companies as of this morning provide us with a good enough basis to draw the preliminary conclusion that the second quarter earnings season may not be materially different from what we saw in the last two quarters.

Total earnings for these 120 companies are up 17% from the same period last year, primarily due to strong results from the large banks in general and Bank of America (BAC - Analyst Report) in particular. This compares to 7.7% growth for these same companies in the first quarter, when banks didn’t have such easy comparisons.

Approximately 67% of all companies are coming out with positive earnings surprises, with a median surprise of 2.5%. These same companies did a lot better in the first quarter, when 84% beat expectations and the median surprise was 4.6%. Excluding Finance, total earnings growth is a still respectable 4%, which compares to 6.4% in the first quarter.

And even though the reports thus far are weighted more towards Finance, a couple of conclusions can be safely drawn from the handful of bellwethers from other sectors that have reported. First, the global slowdown is making it difficult for revenue gains to come by. And second, the dollar strength is proving a key headwind for companies that have substantial international operations.

We have seen these two elements present in host of earnings reports, ranging from General Electric (GE - Analyst Report) this morning and Microsoft (MSFT - Analyst Report) after the close on Thursday to Intel (INTC - Analyst Report) and IBM (IBM - Analyst Report) the other day.

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