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.

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%.

ADX

10,317

-0.5% (YTD: +9.5%)

DFM

6,112

-0.8% (YTD: +18.4%)

Nasdaq Dubai UAE20

5,099

-0.7% (YTD: +22.4%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.2% o/n

4.1% 1 yr

TASI

10,833

-0.8% (YTD: -10.0%)

EGX30

34,272

+0.2% (YTD: +15.2%)

S&P 500

6,238

-1.6% (YTD: +6.1%)

FTSE 100

9,069

-0.7% (YTD: +11.0%)

Euro Stoxx 50

5,166

-2.9% (YTD: +5.5%)

Brent crude

USD 69.25

-0.6%

Natural gas (Nymex)

USD 3.05

-1.1%

Gold

USD 3,410

+0.3%

BTC

USD 114,262

+1.2% (YTD: +22.0%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.53

+2.4% (YTD: +1.4%)

S&P MENA Bond & Sukuk

147.17

+0.2% (YTD: +5.2%)

VIX (Volatility Index)

20.38

+21.9% (YTD: +17.5%)

THE CLOSING BELL-

The DFM fell 0.8% on Friday on turnover of AED 632.7 mn. The index is up 18.4% YTD.

In the green: Gulf Navigation (+5.8%), National International Holding Company (+4.6%) and Spinneys (+1.9%).

In the red: Union Properties (-4.0%), Mashreqbank (-3.5%) and Commercial Bank of Dubai (-3.5%).

Over on the ADX, the index fell 0.5% on turnover of AED 1.0 bn. Meanwhile, Nasdaq Dubai was down 0.7%.

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