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Not to downplay the importance of corporate profits to the economic recovery.

Market-watchers applauded last quarter as companies in the Standard & Poor’s 500 index reported 92 percent higher operating earnings than a year earlier _ the biggest yearly increase ever, Silverblatt said.

Those healthy results reflected an improving economy and suggested that Americans were spending more again. But after five straight quarters of bigger profits, investors are showing they want more evidence the recovery is on the right path.

Analysts say sales are the best indicator of when companies will start adding jobs. When jobs will come and where they’ll come from are two of the biggest questions hanging over the recovery.

“The stimulus programs were supposed to jump-start the economy and break the downward cycle by convincing both companies and consumers that better times were here,” Silverblatt said. “Earnings are good, but so far we’re not seeing the sales or the jobs.”

Investors may be overreacting, said Paul Hickey, co-founder of stock-data tracker Bespoke Investment Group in Harrison, N.Y. But it appears they can be won over when the numbers are good enough.

Just a week ago, Intel reported quarterly revenue that was more than a half-billion dollars above analysts’ expectations en route to its biggest profit in a decade. Its stock climbed.

Wall Street’s wariness, its instinct to sell at any hint of possible trouble, is understandable at a time of great economic uncertainty and a volatile market. No one wants to be burned like they were in 2008.

But sooner or later, they want to see companies delivering results on sales that are as good as the ones on profits.

“You have to have revenue growth eventually,” says Hickey.


AP Business Writer Chip Cutter in New York contributed to this report.