The continued acceleration in sales growth gave profits the added lift. Revenues of early filers rose 12%, the third double-digit increase in a row. Economists say better demand and pricing power are driving the gains. Combine that with a continued zeal for holding down costs, says Richard D. Rippe, chief economist at Prudential Equity Group LLC, "and you have a great mix for profits."
Leading the pack was the tech sector. Among the standouts: Apple Computer Inc. (AAPL
), whose profits surged 221%. Financial firms did well, too. While one-time charges for legal settlements hit profits at Citigroup (C
), they soared elsewhere. Morgan Stanley (MWD
) led the way with a 104% gain. And thanks mostly to their finance arms, U.S. carmakers scored, as well. Ford Motor Co.'s profits rose 173%.
Rising rates could slow things somewhat in the third quarter, although economists still forecast robust profits. Most businesses can live with that. By Robert Berner in Chicago