Ford Motor Co.'s unexpected $2.3 billion second-quarter profit could signal the end of the worst downturn in recent automotive history for at least one of Detroit's automakers, but Ford's recovery still depends on the broader economy.

Though Ford's profit was due largely to one-time gains, consistent improvements in its underlying financials are sparking optimism among investors, analysts and union leaders that has not been seen for some time.

Ford shares gained 60 cents Thursday on the results, closing up 9.4 percent at $6.98 after a day of heavy trading that helped push the Dow over 9,000.

The company also said it has reached a new agreement with the United Auto Workers that will allow Ford to cover billions in retiree health care obligations with company stock priced at current market values -- previously, the UAW said the shares had to be valued no lower than about $2.

That's a vote of confidence in Ford's future, said Sean McAlinden, chief economist at the Center for Automotive Research.

"This is a stock that, when this economy recovers, is going to $20," he said. "I'd say we've got a hot auto company here in Michigan again."

McAlinden predicted that Ford will replace General Motors Co. as the nation's largest automaker. By next year, he said, more UAW members will work at Ford than at GM for the first time in history.

Thursday's numbers offered a sharp contrast to the staggering $8.7 billion loss Ford posted in the same quarter a year ago. Excluding one-time items, Ford still surprised analysts with a loss from continuing operations of $424 million, about half what Wall Street expected and a $609 million improvement over 2008.

Ford cut its cash burn rate by more than two-thirds, from $3.7 billion in the first quarter to $1 billion. It also saw the amount it makes on each product increase in key markets such the United States, and gained 2 percentage points in U.S. market share over the same period last year despite lower incentives.

"Those are real proof points that the plan is working," CEO Alan Mulally told The Detroit News. "We're moving into a different phase now. We're starting to grow."

He attributed the gains to aggressive cost-cutting, new products and better use of the company's global assets.

"Mulally has recognized what was right at Ford and leveraged it, putting Ford in a strong position relative to its competition," said analyst John Murphy of Merrill Lynch. "A good second quarter, and liquidity appears solid."

But Mulally stressed that Ford still faces some real challenges, not the least of which is the broader economy.

"Clearly, the business environment remains difficult," he said. "While we still expect the economy to begin to improve in the second half of the year, the recovery is likely to be more modest than many of us had hoped."

The potential for disruption in the U.S. supply base is another risk, said Chief Financial Officer Lewis Booth.

Some important Ford suppliers, including Visteon Corp., have filed for Chapter 11 bankruptcy and many more are teetering on the brink.

"In some cases, we've had to lend them money," Booth said. "It's going to hurt our profits a little bit."

Analyst Shelly Lombard of Gimme Credit said Ford clearly benefited from the problems facing GM and Chrysler Group LLC, but said it is hard to tell whether those gains can be sustained.

"Ford delivered exactly what we wanted to see -- lower cash burn," she said. "But it's still too early to tell whether Ford has got its swagger back since some of the improvement was due to market share and price gains that Ford probably picked up at General Motors and Chrysler's expense while they were in bankruptcy."

Lombard warned that the gains made in the second quarter will be hard to match in the third quarter, which has historically been weak for Ford.

The company made the same point to analysts in a conference call Thursday.

If Ford's stock remains high, some analysts expect the company to pursue another debt-for-equity swap. In May, Ford issued 345 million new shares of common stock, raising $1.6 billion, and helping it trim $10.1 billion in debt from its balance sheet since the beginning of the year.

Ford ended the second quarter with $21 billion in available cash, but still needs to improve its balance sheet to address lingering concerns that GM's bankruptcy put the Detroit automaker on a stronger financial footing.

The new UAW deal should help. It would allow Ford to cover up to half of its $13 billion obligation to a union-run trust fund with company stock priced at current market value.

The UAW had agreed earlier this year to accept Ford stock in lieu of cash, but had fixed its value at about $2 a share. At the time, Ford's shares were trading at that level, and the move was aimed at preventing the company from exercising this option if their value fell below that. But what was intended as a floor quickly became a ceiling as Ford's shares rallied, preventing the company from taking advantage of the deal.