US quarterly earnings so far tell a tale of two economies: Those that do big business overseas like IBM are doing well, while companies more dependent on the American consumer like Harley-Davidson Inc. are hurting.

There was broad-based weakness in earnings last week from companies exposed primarily to the US economy, as the sharp slowdown crimped demand for goods and services from the iconic Harley motorcycles to Marriott hotel rooms.

Harley-Davidson said it would report full-year earnings well below its forecast, while hotel operator Marriott International Inc. said the slowing US economy was taking a toll on travel spending.

"Things that are domestic and exposed to consumer discretionary spending - absolutely they're having a bad time.

This is a recession, and I would say its not time to buy these stocks yet," said David Bianco, chief US equity strategist at UBS in New York.

But investors were encouraged by a strong showing from some of the large multinational companies that benefit from the weak dollar, either through the conversion of overseas profits into greenbacks or because they are more competitive against foreign rivals.

International Business Machines Corp. provided the biggest lift to the Dow industrials last Thursday, after the computer services company, which is seen as a bellwether of business activity, raised its 2008 outlook late on Wednesday. IBM gets about two-thirds of its revenue from outside the United States.

The weak dollar and strong demand from emerging economies is also helping commodities producers.

Oil and gas explorer McMoRan Exploration Co. posted a profit that significantly beat Wall Street expectations as oil and gas production and prices rose considerably.

As US companies are increasingly exposed to overseas markets, their earnings are weathering the downturn, in contrast to previous recessions.

So far this quarter, the majority of the companies have exceeded their lowered forecasts.

Of the 51 companies that have reported so far, 82 per cent beat estimates compared with only 43 per cent at this point last quarter, according to JPMorgan Securities.

"When we put it all together, the earnings haven't crumbled similar to past recessionary periods, the situation is much more well behaved," said Ned Riley, chief executive at Riley Asset Management.

"We're holding up well, but you only need one blue chip to do badly, or well, for that matter, and the feeding frenzy begins," Mr Riley said.

IBM's strong results followed solid earnings from chip-maker Intel and reassured investors who had been concerned that big technology stocks would be the next victim of the downturn.

"In order for profits to collapse as they normally do in a recession, you need industrials, technology, materials and energy to decline sharply.

It's those sectors that usually decimate S&P profits and that is just not happening at all," Mr Bianco of UBS said.

In the fourth quarter of 2007, only three out of 10 sectors reported a decline in earnings, compared with eight out of 11 in the fourth quarter of the 2001 recession, according to a recent report by Thomson Financial.

"It's because those hyper-cyclical sectors have become global-cyclicals," Mr Bianco said. "More than half their revenues come from abroad, so they're positively exposed to commodities and the weak dollar."

But, even among those companies with international exposure, there were some signs of trepidation, with diversified manufacturer United Technologies Corp., whose earnings topped expectations, giving a cautious full-year outlook due to the slowing economy.

"This quarter I am looking for more differentiation as to who is better able to maintain operating margins, who is not using macro(-economic) excuses," said Subodh Kumar, who heads investment firm Subodh Kumar & Associates.

"At the moment, that seems to be your IBMs, your Intels. Some of the industrials, on the other hand, are mentioning the economy and striking a more cautious note."

Financial services companies, however, did not get help from international exposure as their earnings were bludgeoned by the credit crisis. Large banks and brokers, such as Merrill Lynch, posted significant losses because they had more exposure to risky debt, while regional banks on average beat expectations.

But a lot of the bad news seems to already have been built into share prices, and financial-sector stocks have mostly risen this week.