Rising Profits May Boost Stock Market
The profit tide is rising.</br></br>For the second straight quarter, many companies are not only beating analysts' earnings forecasts but also are widening their profit gains over year-earlier periods. Analysts predict these trends will continue into 1993 despite the anemic economy.</br></br>"The profit recession is clearly over," proclaims Abby J. Cohen, market strategist at Goldman Sachs.</br></br>That bodes well for the stock market. Even though some investors think stocks have become pricey, many analysts believe the earnings recovery is laying the groundwork for further gains. James Solloway, director of research at Argus Research, says that stronger earnings coupled with continued low interest rates will carry the market higher for some time, even on top of last week's swift advance.</br></br>"We may see a mild consolidation in the short term, but by no means do I consider myself a bear," Mr. Solloway says. "There are forces here that are very powerful and positive."