Earnings everywhere are outpacing expectations

It’s not just stock prices and FICO scores that are hitting record highs. In the first quarter of this year, 403 of the stocks in the S&P 500 delivered earnings higher than Wall Street analysts had forecast — a record that was promptly broken in the second quarter, when 407 stocks achieved that feat.

The big picture: Earnings beats are always more the rule than the exception, even during bear markets. But these levels are unprecedented.

The big question: How are so many companies managing to beat expectations, quarter in and quarter out?

• The strong economy, combined with tax-cut revenues, certainly helps.
• Companies announce earnings guidance figures they know they can beat, in a sign that they're feeling very little pressure from Wall Street that their profits aren't high enough.

The bottom line: Wall Street is enjoying a rare period of being very happy with the companies it invests in and the amount of money they're making.