Profits Boom for America’s Biggest Companies

SPEAKER_1 (0:00)

This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data, they want your identity, they want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now, and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at reliaquest.com. That's reliaquest.com.

Pierre Bienaimé (0:34)

The FTC sues Amazon for allegedly manipulating the prices it charges advertisers. Plus, the predictions platform, CalShe, issues its first lifetime ban on former Congressman George Santos.

And America's biggest companies had a hot quarter.

Theo Francis (0:51)

These are the best earnings per share gains year over year that we've seen since right after the pandemic shutdown and the same holds for revenue gains. These are really big.

Pierre Bienaimé (1:00)

It's Monday, August 31st. I'm Pierre Bienaimé for the Wall Street Journal, filling in for Alex Osala. This is the PM edition of What's News, the top headlines and business stories that move the world today.

We start today's show in Washington, where the Supreme Court is allowing President Trump to keep building his White House ballroom. That clears the way for one of the president's prized projects. In a five to four ruling today, the high court said that a historic preservation group likely doesn't have legal standing to challenge the project, and that the Trump administration would suffer irreparable harm if the project were stopped now.

Chief Justice John Roberts and the court's three Democratic-appointed justices dissented.

The betting website, Kalshi, is banning former Republican Representative George Santos for life. Kalshi says it's the company's first lifetime ban. It's also fining Santos over $70,000.

The Commodity Futures Trading Commission alleges that Santos placed bets on whether he would be at President Trump's State of the Union address. He made misleading social media posts suggesting he would attend, but then he didn't. Santos' attorney didn't immediately respond to requests for comment. Cauchy's crackdown follows concerns in Washington about insider trading on prediction markets. The company announced several other disciplinary actions today, including a three-year ban for a Republican congressional candidate in North Carolina. The Federal Trade Commission sued Amazon today, saying that the company manipulated prices for ads on its platform. The agency says that made Amazon tens of billions of dollars over seven years. The FTC filed the complaint along with more than 20 state attorneys general. It says Amazon secretly raised the minimum price companies had to pay to place ads. The FTC says that in recent years, Amazon did this 70 to 80 percent of the time. Amazon says it properly described how its ad auctions work to advertisers.

At America's biggest companies, profits are booming, and their leaders say that's not likely to change soon. For every company in the S&P 500 that lowered their profit guidance for the second quarter, roughly two companies raised it. One big reason for that optimism, Americans keep spending and giving a big boost to sales. Theo Francis covers US companies for the Wall Street Journal, and he joins me now. Theo, you write that across S&P 500 companies, per share earnings soared 53 percent in the second quarter compared to last year, while sales rose nearly 16 percent. So big companies are doing really well right now. Why?

Theo Francis (3:40)

These are the best earnings per share gains year over year that we've seen since right after the pandemic shutdowns in mid-2021, and the same holds for revenue gains. These are really big. Consumer spending is holding up. You're seeing a lot of spending on the AI buildout, and remember data centers are buildings. That's construction equipment, construction workers, equipment and wiring, and so there's a lot of capital spending generally.

Then you have other factors like the tariff refunds, which are temporary, but for this quarter, they certainly have been a nice bump to the bottom line for a lot of companies.

Pierre Bienaimé (4:21)

Right. A bunch of companies have cited their tariff refunds in recent earnings calls. There's the food company, JM Smucker.

SPEAKER_4 (4:27)

The increase reflects $115 million of tariff refunds.

Pierre Bienaimé (4:32)

Garmin, which makes smartwatches and other fitness gear.

SPEAKER_4 (4:35)

Able ProductNet and tariff refunds are approximately $21 million.

Pierre Bienaimé (4:39)

As well as the big box retailer's target.

SPEAKER_5 (4:41)

Our Q2 P&L included a $994 million pre-tax benefit from tariff refunds.

Pierre Bienaimé (4:47)

And Walmart.

SPEAKER_4 (4:48)

We were eligible for approximately $2.9 billion of tariff refunds.

Pierre Bienaimé (4:52)

That all amounts to a lot of money. In your story, you cite an estimate from the private equity firm Apollo that the refunds are likely to account for more than 4% of third quarter growth for the US economy.