Of the 169 Standard & Poor's 500 companies that have reported so far, 71 percent beat earnings estimates, many of which were modest to begin with, Thomson Reuters data showed. But they did so with help from share buybacks, cost-cutting and other measures, instead of robust sales growth.

Despite those beats, analysts are now trimming their profit and sales expectations for the second quarter on the belief that the stronger U.S. dollar and sharply lower oil prices, widely held to have hurt first-quarter results, will continue to dampen business growth for a while.

"The fact that you're seeing some companies beat on the bottom line is not going to change the story. You're going to see some pretty ugly numbers over the next couple of quarters," said Dan Suzuki, senior U.S. equity strategist at Bank of America-Merrill Lynch in New York.

Revenue in the first quarter has disappointed - just 44 percent of the early reporters topped analysts' forecasts - and sales are expected to have dropped 3.3 percent from a year ago, Thomson Reuters data showed.

First-quarter earnings are expected down 1.5 percent from a year ago, based on actual results and estimates for the rest of the S&P 500.

Of the early reporting companies for the first quarter, 59 have beaten earnings estimates but missed on sales, with the trend seen in a wide range of sectors.

Earnings expectations have improved for most S&P sectors since April 1, with financials <.SPSY> on track to post the biggest profit growth in the quarter.

Among companies that beat on profit but missed on revenue was oilfield services provider Schlumberger (>> Schlumberger Limited.), which said cost management helped to offset lower activity and pricing pressure. It said it would cut a further 11,000 jobs and reduced capital spending plans for the year.

Cost cuts also helped General Electric (>> General Electric Company), whose earnings surpassed expectations while sales disappointed, in part of because of the strong dollar.

The quarter's earnings decline would be worse if not for stock repurchases, which spread profit over a smaller number of shares, said Greg Harrison, Thomson Reuters' senior research analyst.

Results have mostly been a relief to investors, helping to push all three major indexes near record levels. The S&P 500 <.SPX> is up 1.2 percent since April 8, when Alcoa (>> Alcoa Inc) kicked off the season.

SECOND-QUARTER WEAKNESS

Wall Street also seems to be shrugging off signs of further weakness later in 2015 and the possibility that the first quarter, despite many positive surprises, could be the worst for earnings since 2009.

Second-quarter S&P 500 earnings could slide 1.6 percent from a year ago, analysts now believe. That is down from an April 1 forecast for a decline of 0.5 percent. Sales are forecast to fall 3.9 percent in the second quarter, compared with an April 1 estimate for a 2.8 percent decline.

Third- and fourth-quarter estimates are also down since the reporting season began.

There could still be negative surprises ahead, and most S&P 500 energy companies, slammed by the oil price drop, have yet to post results. Thomson Reuters estimates show a year-over-year 64 percent profit decline for the sector.

Still, analysts aren't giving up on 2015 yet. Fourth-quarter S&P 500 earnings are forecast to show a gain of 5.4 percent, while earnings are forecast to rise 1.0 percent for 2015, Thomson Reuters data showed.

"I'm not sure that this is the peak of the profit cycle," said Dan Greenhaus, chief global strategist at BTIG in New York.

(Reporting by Caroline Valetkevitch; editing by Linda Stern and Nick Zieminski)

By Caroline Valetkevitch

Stocks treated in this article : Alcoa Inc, General Electric Company, Schlumberger Limited.