By Matt Townsend July 21 (Bloomberg) -- U.S. stock futures rose, indicating the Standard & Poor’s 500 Index may rally above yesterday’s eight-month high, as Caterpillar Inc.’s profit that was three times analysts’ estimates spurred bets the recession is ending. Caterpillar, the biggest maker of earthmoving equipment, jumped 9.9 percent. More than 79 percent of S&P 500 companies that released results have beaten earnings projections for the second quarter, the highest proportion in Bloomberg data stretching back to 1993. Coca-Cola Co., DuPont Co. and Merck & Co. advanced after they also topped forecasts. S&P 500 futures expiring in September gained 0.5 percent to 953.5 at 8:36 a.m. in New York. Dow Jones Industrial Average futures added 0.6 percent to 8,855. Europe’s Dow Jones Stoxx 600 Index rose for the seventh straight day, the longest streak since the financial crisis began in 2007, increasing 1.3 percent. The MSCI Asia Pacific Index climbed 1.4 percent. “The fact that comparisons have been coming in that favorably relative to second quarter 2008 is pretty impressive,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages $222 billion. “Most people missed the lows and continue to treat this as a rally in a bear market. Hey folks, every bull market that I’ve seen began being called a short-term rally in a bear market.” Per-share earnings beat projections by an average of 13 percent for S&P 500 companies that have reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to data compiled by Bloomberg. Economic Rebound The S&P 500 yesterday rallied to its highest level since Nov. 5 as a gauge of future economic growth topped projections and speculation grew that CIT Group Inc. will avoid bankruptcy. The benchmark for U.S. equities last week advanced 7 percent as companies from Goldman Sachs Group Inc. to Intel Corp. reported results that topped analysts’ estimates. Credit Suisse Group AG today advised investors to trim their holdings of government bonds and buy equities, reversing a recommendation from June. The bank raised its estimate for the S&P 500 by 14 percent to 1,050 by the end of the year, citing improving economic indicators and earnings. Investors should increase holdings of global equities to “overweight” and reduce government bonds to “benchmark,” according to London-based global strategist Andrew Garthwaite. Goldman Sachs yesterday boosted its year-end estimate for the measure to 1,060, implying a 15 percent surge between June 30 and Dec. 31. That would be the steepest second-half rally since 1982. Caterpillar Jumps Caterpillar rallied 9.9 percent to $40.28. Government stimulus programs and improved credit markets helped stabilize demand for the world’s largest maker of bulldozers and excavators. Profit excluding some costs was 72 cents a share, surpassing the 22-cent average estimate of 20 analysts surveyed by Bloomberg. The company also raised its full-year forecast. Coca-Cola, the world’s largest soft-drink maker, advanced 0.1 percent to $51.09. Excluding some items, Coca-Cola earned 92 cents a share, compared with the 89-cent average of nine estimates compiled by Bloomberg. DuPont, the third-biggest U.S. chemical maker, added 2.4 percent to $29. The company eliminated jobs and reduced costs faster than expected, helping it post profit excluding items of 61 cents a share, 15 percent higher than the average of analysts’ estimates. Merck, set to buy rival Schering-Plough Corp., rallied 2.7 percent to $28.69 after profit dropped less than analysts expected on savings from job cuts. To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.

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