'Operational Discipline'
3M, the maker of Post-it Notes and fuel system tuneup kits, posted earnings per share that beat analysts' estimates by 10 cents, helped by rising domestic auto and industrial demand.
"The Americas were strong," Chief Executive Officer Inge Thulin said yesterday. "Asia-Pacific was somewhat slower and Western Europe held its own with very good operational discipline."
Honeywell International Inc., maker of products from flight controls to work boots, raised its 2012 forecast after posting quarterly profit that beat analysts' estimates on demand for aircraft parts and energy technology. General Electric Co. beat earnings per share predictions by a cent.
U.S. retail sales, vehicle purchases and even housing starts have helped drive the economy and earnings, according to Paulsen, based in Minneapolis, Minnesota.
The U.S economy may expand 2.3 percent this year, up from 1.7 percent in 2011, according to the median of 74 estimates compiled by Bloomberg. The euro area is forecast to shrink 0.4 percent and China's growth is expected to slow to 8.4 percent.
The S&P 500 Index has gained 9.1 percent since the end of 2011. It gained 12 percent in the first three months of 2012, the biggest first-quarter gain since 1998.
Companies had tamped down expectations because of the difficulty in predicting how sales would be affected by budget cuts in Europe and a Chinese economy that posted its slowest pace of growth in 11 quarters, said investors, including David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co.
"What we're seeing in the first quarter is inordinately high," Sowerby, whose firm oversees about $160 billion, said in a telephone interview. "That's primarily a reflection that companies have been more conservative in their guidance."
With about a third of companies reporting, Paulsen said he's optimistic earnings will maintain their positive track.
"A legacy of the great 2008 crisis is that it's left us feeling that things just can't be this good."