It's official: The first quarter was a huge pleasant surprise.
In a report fired off to clients, Deutsche Bank figures with 87 percent of the S&P 500 companies having reported, earnings for the March three-month period surged 18 percent year-over-year. This far exceeded the 12 percent expectation at the beginning of the quarter.
It was also the ninth consecutive quarter of sequential earnings growth.
Earnings were driven by cyclical sectors such as Materials (up 55 percent), Energy (up 40 percent) and Industrials (34 percent).
Altogether, revenues rose by a healthy 9 percent for the quarter, an indication that earnings were not solely driven by cost-cutting, a very good sign. In addition, revenues outpaced the year-over-year change in nominal GDP for the sixth consecutive quarter.
Deutsche Bank also points out that all 10 S&P 500 sectors saw margin expansion from year ago levels.
Perhaps the only disappointment: Just 69 percent of companies beat earnings estimates, slightly less than the past equity quarter average of 74 percent.
In any case, Deutsche Bank cites four reasons the first quarter was better than expected.
It notes that the surge in commodity prices in the first quarter boosted the commodity related sectors as Materials and Energy. "In addition, these two sectors have seen the largest upward revisions to 2011 earnings year-to-date," DB adds.
The 6.5 percent decline in the dollar boosted companies that get a large portion of their earnings from overseas. They include Info tech, Materials and Energy
Strong overseas sales also boosted first-quarter results, thanks to the combination of a more competitive dollar and stronger growth overseas.
Finally companies benefitted from expanding margins.