Growth comes as a surprise

NEW YORK – Wall Street analysts are calling it the first-quarter surprise – and wonder if it’s a harbinger of even better times to come.

At the start of earnings season last month, investors prepared for what was expected to be the slowest period of corporate profit growth in more than four years. Analysts had slashed forecasts across every sector, worried that higher energy prices, a continued housing slowdown and increasing subprime mortgage problems would slice into results for the first three months of 2007.

They turned out to be wrong, and astounded investors ran to buy stocks that suddenly looked more attractive – in the process, they catapulted major indexes to record levels.

Standard & Poor’s said the growth rate for members of its flagship S&P 500 index showed, on average, a profit growth of 8.3 percent for the quarter – easily topping projections of a 3 percent rise.

It’s apparent U.S. companies have proven themselves to be more resilient in the face of a slowing economy than previously thought.

So, even with ongoing concerns about inflation and consumer spending, Wall Street is increasingly looking for big-cap stocks – particularly those operating multinationally – to help extend the market rally.