(Bloomberg) -- U.S. corporate profits rebounded significantly in the third quarter as businesses reopened more broadly and demand accelerated from a pandemic-induced slump in the first half of the year.
The government's first estimate of earnings for the period showed a record $495.3 billion annualized increase, or at a 27.1% annual rate, the Commerce Department's report on gross domestic product showed Wednesday. The improvement followed a 10.3% decrease in the April-June period and a 12% decline in the first quarter that was the biggest since the end of 2008.
The figures show both the magnitude and speed of the Covid-19 pandemic's hit to the bottom lines of American businesses, and how companies' fortunes reversed due to a surge in third-quarter demand. The improvement in profits help explain a stock market rally that saw the Dow Jones Industrial Average close above 30,000 on Tuesday. The economy expanded at an unrevised 33.1% annual rate from July through September.
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The report also showed for the first time that gross domestic income, which measures all income earned in the production of goods and services, increased an annualized 25.5% in the third quarter after a record 32.6% plunge in the prior three months.
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