With stronger reports piling up at midweek, it appeared that S&P 500 earnings will increase 1.1 percent from last year, says Sam Stovall, chief equity strategist with S&P Capital IQ. Before earnings season started, his firm predicted a 2 percent decline.At first, corporate reports appeared to be as bad as many feared. Alcoa said China's economic slowdown was reducing demand for its aluminum. Energy and commodity companies were similarly downbeat. Dow Chemical CEO Andrew Liveris announced layoffs and spending cuts, saying weak sales in China and Europe are contributing to a "slow-growth and volatile world." The Dow Jones industrial average plunged 243 points on Tuesday, its third-biggest decline of the year, after more comments about weak demand from DuPont, 3M, UPS and Xerox. Then on Wednesday, Aflac, the life-insurance company known for its nasal-voiced spokesduck, posted higher net income on double-digit revenue growth. Boeing, among the biggest U.S. exporters, reported revenue growth and raised its expectations for the rest of the year. US Airways said net income and revenue rose during peak travel season. "I think it's intriguing that everyone thinks earnings are falling off the cliff," Stovall says. He expects earnings and revenue to improve by the end of the year and into 2013. After this year's weakness, he says, companies will have an easier time showing improvement in next year's results. Stock traders appeared to agree that earlier fears were overplayed. In the three days after Tuesday's plunge, the Dow barely budged, posting a net gain of just 4.7 points. "All in all, I'm a tad encouraged by the earnings season, and the sense that we are seeing more people beat expectations," said David Brown, CEO and chief market strategist for Sabrient Systems, a research firm. As of this week, 62 percent of the companies had reported third-quarter earnings that were better than analysts' expectations, according to S&P Capital IQ. That's right in line with the 10-year average. That's another signal that this quarter, while weaker than the most recent few, isn't quite wreaking havoc on U.S. companies.