Big Tech and big banks drive US earnings in 2Q 2025, but others aren’t faring so well

The US economy is showing signs of a growing gap, with major tech firms and big banks thriving while many other businesses are struggling with higher costs and new tariffs, the Financial Times reports. Second quarter earnings from companies like Apple, Meta, Microsoft, JP Morgan, and Goldman Sachs have exceeded expectations, reinforcing President Trump’s assertion that the American economy is booming, but that can’t be said for all companies. These companies, especially those in tech and finance, are driving a disproportionate share of S&P 500 earnings, as the top ten stocks now account for one-third of total earnings — with tech leading the way with 41% y-o-y earnings growth and finance following with a 12.8% y-o-y increase.

Tech giants, including Microsoft and Meta, both beat expectations, with profits up 25% and 36%, respectively, due in part to strong spending on artificial intelligence. “It’s been another solid earnings season, with bulls focused on their growing artificial intelligence capex spending,” AlphaCore’s David Stubbs said.

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But, the rest of corporate America is telling a different story. Many companies in the consumer staples and materials sectors are seeing declines, with earnings down y-o-y. Over half of S&P 500 firms that have reported 2Q earnings so far have seen their margins shrink. While sales are rising, increased costs — partly due to tariffs — are affecting earnings as many firms have not yet passed those costs on to consumers.

The effects of Trump’s tariff policy are becoming more visible, especially in sectors tied to manufacturing and consumer durables. Automakers, airlines, and home appliance producers reported some of the steepest downward revisions to their full year net income guidance. Ford, for example, posted a surprise loss partly due to a USD 800 mn tariff-related expense. Meanwhile, companies missing earnings expectations saw their share prices drop an average of 5.6% in the four days around their earnings announcements, which is more than double the five-year average.

The economic data is also showing signs of a slowing momentum. Job growth slowed significantly, with only 106k jobs added between May and July, compared to 380k in the previous three months. GDP grew at an annualized rate of 1.1% in 1H 2025, down from 2.9% in 2H 2024. Despite this, the Federal Reserve held rates steady last week at 4.25-4.5%, resisting Trump’s pressure for cuts amid what he claims is an economy resilient to his trade war.

MARKETS THIS MORNING-

Asian markets are mostly in the green in early trading this morning with South Korea’s Kospi leading gains, rising 0.5%. Hong Kong’s Hang Seng and the Shanghai Composite are looking at more moderate gains of 0.2%, meanwhile Japan’s Nikkei is down 1.9%.

THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 3.4 bn (33.7% below the 90-day average). Local investors were the sole net buyers. The index is up 15.2% YTD.

In the green: Misr Cement Qena (+6.2%), Mopco (+4.6%), and Eastern Company (+3.2%).

In the red: Beltone Holding (-3.3%), Egypt Aluminum (-1.8%), and Palm Hills (-1.7%).

CORPORATE ACTIONS-

The Financial Regulatory Authority greenlit Emaar Misr’s request to amend its business activities to include importation and real estate development and remove real estate marketing from its scope of operations, according to a disclosure (pdf) to the EGX.