Second quarter earnings of companies in the S&P 500 may be down 35.2%, but the results are not as bad as analysts had predicted, Investor’s Business Daily reports. Thus, many fund managers and analysts are expecting growth to return in the fourth quarter and continue into the first half of 2010.

“So from that standpoint,” said John Butters, director of U.S. earnings research at Thomson Reuters, “this season is encouraging. One way of looking at it is that, year over year, this [simply] is not a good earnings season.”

Bill Greiner, chief investment officer at Scout Investment Advisors, said, “What I’m excited about, and why the market moved up [last] week, is statements by companies that things are getting better. They’re saying costs are under control and the business environment is improving.”

With only 55 companies in the S&P 500 having reported earnings so far, it’s early in the game, but Greiner expects the number of companies that outpace analysts’ consensus to be two to one. Indeed, so far, 39 companies, or 71% of the 55 reporting, have beaten expectations.

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