NEW YORK (CNN/Money) - Pssst. Not to disturb the ongoing inflation versus stagflation debate, but over on the sidelines, first-quarter earnings have quietly been topping forecasts.

Granted, that's what earnings usually do, what with analysts tending to lowball forecasts and companies reluctant to overpromise results.

But even so, results in the first-quarter have been solid enough to temper at least some of the worries about earnings -- a trend that could continue into the second quarter, analysts and market watchers said.

It was no secret that earnings growth would slow this year after profits jumped more than 20 percent last year from 2003 -- the tale end of a three-year bear market.

"The expectation was that first-quarter earnings and commentary would show us that conditions are bad, but with the exception of a few high-profile disappointments, the commentary has been mild to better," said Linda Duessel, senior vice president and market strategist at Federated Investors.

Not that investors have been all that impressed. The stock market has struggled all year as investors worry about the pace of economic growth in a rising interest rate environment, not to mention higher oil prices.

"Overall, the earnings have been pretty good, but the impact has been felt on a stock-by-stock basis, rather than something broader," said Donn Veckery, co-founder of Gradient Analytics, an independent research firm.

Although a few big companies will trickle in this month, about 90 percent of the companies in the S&P 500 have reported.

Earnings grew nearly 14 percent from a year earlier, according to First Call/Thomson Financial research, nearly double the pace analysts had been forecasting. The figure is a blended rate of reported earnings and forecasts for companies yet to report.

At the start of the year, analysts expected first-quarter earnings to grow about 7.6 percent, much slower than the 20 percent pace in four of the five previous quarters, according to Thomson Financial.

In terms of the earnings improvement, "we've mainly seen it in the energy sector, particularly oil well drilling and services, all boosted by higher oil prices," said Richard Segarra, director of research at Ford Equity Research, an independent research firm.

Strip out the gains in energy earnings and first-quarter profits rose just 11.1 percent, year over year, said David Dropsey, a research analyst at Thomson Financial.

Among other standouts, "materials have done well, and there's been some strong trending in transportation, particularly railroads," Segarra added.

(For a look at earnings growth by sector during the quarter, see the chart).

Segarra cited the most deterioration in earnings growth for the automakers -- no surprise to those watching the struggles of Ford (Research) and General Motors (Research) lately -- as well as the tire & rubber sector, and forest products. Chips have also had a tough time. He expects these sectors to continue to struggle with earnings growth in the second quarter.

GM and Ford were largely responsible for making the consumer discretionary sector the weakest in the quarter, in terms of earnings growth, said Dropsey. If you stripped out earnings from those two companies, the sector's earnings growth would go from a 7 percent decline to a 12 percent rise, he added.

Other interesting standouts in the quarter included financials, which grew 12 percent year over year, versus expectations for a decline of 1 percent, according to Thomson Financial.

Currently, second-quarter earnings are forecast to grow just 7.2 percent year over year, but that number is likely to be revised upward as the quarter wears on, just like first-quarter forecasts were, the analysts said.

(For a look at forecasts through the rest of the year, see the chart).

One thing that did not change this quarter was the spate of interesting explanations companies came up with when they missed forecasts.

Retailers often cite the weather, and this year was no exception. Some also pointed to calendar changes, such as the early Easter this year. Higher oil and gas prices were cited repeatedly, and rising energy costs affect most businesses to varying degrees.

Wendy's (Research) had several reasons for its weaker quarter, most notably the distinctive "finger in the chili" explanation.

Veckery noted that one of the oddest explanations for a weak quarter came from Overstock.com (Research).

The online closeout retailer, in its recent conference call with analysts, speculated that weakness in late March and early April may have been related to Pope John Paul II's illness in March and his death on April 2.