Oct. 23--OPINION/ANALYSIS:

The last few days have been interesting to watch in the stock market. On the one hand, several companies are issuing positive commentaries about their outlooks, but at the same time some fresh economic data have dashed hopes of any pronounced pickup in the recovery. As suspected, it appears we are in for a slow rebound in the near term, but concerns remain about another leg down that would make this a W-shaped recovery.

Earlier this week, the management of Caterpillar, the maker of bulldozers and excavators, shared its belief that the September quarter was "the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s."

Even though the company narrowed its 2009 earnings guidance to $1.85 to $2.05 a share, from $1.15 to $2.25, the narrower range was still better than the $1.48 per share that Wall Street was anticipating. At the same time, Caterpillar narrowed its revenue forecast for the year to $32 billion to $33 billion from the prior $32 billion to $36 billion. The low end of its revised forecast implies 2.8 percent growth in overall revenue in the current quarter, ending in December, over the quarter ending in September. While it does not seem like much, such figures translate into the first sequential-quarter growth in several quarters.

A similar story happened at Parker Hannifin Corp., which makes motion-control technology for manufacturing and aerospace markets. The company not only reported better-than-expected results earlier this week but also raised its full-year forecast, as management is "cautiously optimistic that it had reached the bottom of the economic cycle." That optimism reflects improved order rates for its products and solutions compared with the prior quarter.

Further supporting evidence that the economy is stabilizing can be found in the Federal Reserve's latest Beige Book, which was released early this week.

The Beige Book is published eight times a year and is a summary of economic conditions in the central bank's 12 districts. Per the report, housing and manufacturing have shown signs of improvement and we can chalk up the comments from Caterpillar and Parker Hannifin as confirming data. On the other hand, all 12 districts reported weak or deteriorating conditions in the commercial real-estate market, and in aggregate the labor market was characterized as "weak or mixed." In a nutshell, the Beige Book was a mixed bag with some things better and some worse, another signal to me that the economic recovery is likely to be a slow one.