The largest equity-market decline since February is failing to spur selling by the biggest US money managers, who say losses will provetemporary as gains in earnings make stocks too cheap to pass up.

Greece and Portugals credit downgrades on Tuesday are no reason to doubt forecasts for profit growth exceeding 50% at Standard & Poors 500 Index companies through 2011, said Kenneth Fisher, chairman of Fisher Investments.

Almost $1 trillion of global equity value was erased on concern rising public debt will spur defaults, derailing the global economy, data compiled by Bloomberg show.

Its a little bit like yelling fire in a movie theatre, it doesnt mean the place is going to burn down, said Fisher, who favours mining companies, computer makers and retailers, in an interview. The quality of earnings is exceptional. Earnings are coming in overwhelmingly above expectations. I dont see any signs that will stop.

While the global rally restored more than $21 trillion to equity markets since March 2009, investors are growing more skittish about the Euro region, which combined makes up the worlds second-largest economy behind the US.

The Euro Stoxx 50 Index has fallen 4.3% this year on concern about growing deficits across the region. The MSCI Asia-Pacific Index gained 4% in 2010 and the S&P 500 rose 6.2%, according to data compiled by Bloomberg.

Futures on the S&P 500 rose 0.4% to 1,185.9 as of 7:22 am on Wednesday in New York. The MSCI World Index of 23 developed countries slipped 0.8%. The US gauge lost 2.3% to 1,183.71 on Tuesday after S&P lowered Greek debt to junk status and Portugal was cut two steps.

The Euro Stoxx 50 slid 3.7% and the euro dropped below $1.32 for the first time since April 2009. Greek two-year note yields surged to a record of almost 19% and Portugals jumped to 5.7% as credit-default swaps on Europe debt reached the highest ever.

Companies in the S&P 500 may increase profits 29% this year and 19% in 2011, the biggest two-year advance since 1998, estimates from more than 1,500 analyst compiled by Bloomberg show. The index is priced at 14.8 times the average prediction for 2010 income.

Should the forecasts prove accurate, the S&P 500 would be trading at its lowest multiple since the 1990s, excluding the six months after New York-based Lehman Brothers Holdings Inc. declared bankruptcy in September 2008.

Tuesdays plunge, which came during congressional testimony by executives of Goldman Sachs Group over the marketing of subprime mortgage securities, follows eight weeks of gains for the Dow Jones Industrial Average, the longest streak since 2004.

I have been cautious since the third week of April, thinking that we were setting up for a correction of somewhere between 5 and 10%, said Jeff Saut, the chief investment strategist at Raymond James & Associates, which manages $230 billion in St. Petersburg, Florida. Greece, Goldman dont change my long-term view at all. Were in a profit cycle recovery. Profits are exploding at the biggest ramp rate in decades and were playing to that tune.

The cost of options to insure against losses in the S&P 500 as measured by the Chicago Board Options Exchange Volatility Index climbed 31% on Tuesday to 22.8 from 17.5, the biggest increase since October 2008.

DuPont, the Wilmington, Delaware-based chemical maker, Atlanta-based United Parcel Service, the largest package-delivery company, and Ford Motorreported profits or sales that topped analyst estimates, and their shares fell 4.4% on average. The falls show Europe is investors focus, said David Rosenberg, chief economist for Gluskin Sheff & Associates.

On the Greece file, the big concern now is contagion risks, Rosenberg said from Toronto. The headlines were all about Greece, but the real action was in Portugal, and its not pretty. So what we are talking about is heightened risk premiums at a time when a 17 VIX index was underscoring a very high level of confidence over the outlook for the economy.

Almost 80% of S&P 500 companies reporting results this earnings season have topped analysts forecasts, data compiled by Bloomberg show. While profits may be outstripping projections, sales are matching analysts predictions when bank and brokerage results are excluded, according to Rosenbergs data.

The International Monetary Fund last week raised its forecast for worldwide growth this year while cautioning that a failure to contain public debt may have severe consequences. Global economic expansion may reach 4.2% in 2010, the fastest rate since 2007, the Washington-based fund estimated. Fiscal fragilities pose the biggest threat to reaching the forecast, the IMF said April 22.