Chief executives generally provide an update on the outlook for their company’s sales or profits during each quarter’s earnings call. Historically, around 25% of US companies raise their guidance (calling for higher profits than expected before), 40% lower it, and the rest leave it unchanged. Over the course of the year, however, there is a seasonal pattern and the share of companies raising their guidance varies. As the earnings season on the second quarter of 2025 draws to a close, guidance has been extremely positive: running at 34%, when typically, it has been at 26%. This corporate optimism has added another support to recent equity market performance on top of better-than-expected profit growth for the quarter. One reason for the more upbeat guidance may simply be that tariffs have not had as negative an impact as expected. US companies importing materials for their production process, or wholesalers importing goods for resale, are ‘paying’ a share of the tariffs imposed by the Trump administration, but the cost to them has been perhaps less than feared. In addition, domestically focused goods producers may be seeing greater demand as consumers turn to relatively cheaper goods, though so far, the impact of tariffs on prices in the shops has been limited.
