Double-digit gains defy expectations

NEW YORK – Advanced Micro Devices Inc. and several other major companies issued warnings this past week that fourth-quarter results will miss expectations. Wall Street barely noticed.

For weeks, analysts have said the long period of stellar earnings growth might be over for U.S. companies, that the 18 straight quarters of double-digit profit growth for Standard & Poor’s 500 companies will be replaced by more modest results.

But investors remain upbeat as hundreds of companies are set to report results in the next few weeks. Shareholders did not go screaming for the exits Friday after AMD, business software maker SAP AG and Murphy’s Oil Corp. warned results will miss expectations.

In fact, the Dow Jones industrials hit a record close. And analysts say there are signs that companies might have been able to eke out double-digit gains during the last three months of 2006.

“There is an indication that the overall quarter might turn out to be better than expected,” said David Dropsey, a research analyst with Thomson Financial that tracks equities. “Earnings are still strong coming out of a lot of sectors.”

As of Thursday, 31 S&P 500 components reported earnings. There were 17 companies that beat expectations, six that met them and eight that reported results below projections. That matches the historical averages, Dropsey said.