{"id":1677160,"date":"2022-10-07T01:50:48","date_gmt":"2022-10-07T05:50:48","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1677160"},"modified":"2022-10-07T01:51:22","modified_gmt":"2022-10-07T05:51:22","slug":"analysis-dollars-gains-spell-earnings-pain-for-u-s-companies","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-dollars-gains-spell-earnings-pain-for-u-s-companies\/","title":{"rendered":"Analysis-Dollar\u2019s gains spell earnings pain for U.S. companies"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">16<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-dollars-gains-spell-earnings-pain-for-u-s-companies%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1677160&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Saqib Iqbal Ahmed<\/p>\n<p>NEW YORK (Reuters) \u2013     A towering rally in the U.S. dollar is expected to hit third-quarter corporate earnings, potentially presenting another obstacle to stocks in a year that has experienced an already-painful market decline.     <\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>The dollar index, which measures the greenback\u2019s performance against a basket of peers, traded an average of 16.7% higher in the quarter that ended Sept. 30 than in the same period a year ago, helped by a hawkish Federal Reserve and turmoil in global financial markets that boosted the dollar\u2019s safe-haven appeal.    <\/p>\n<p>That means a wide range of companies will likely cite the dollar\u2019s rise as a headwind to their bottom lines as corporate earnings season kicks into gear this month. A stronger buck makes U.S. exporters\u2019 products less competitive abroad while hurting U.S. multinationals that need to exchange their earnings into dollars.     <\/p>\n<p>The stronger dollar is \u201cone of the contributors to the notion that earnings expectations for the S&#038;P 500 need to come down more,\u201d said Erik Knutzen, chief investment officer of Neuberger Berman\u2019s multi-asset class portfolios. \u201cIt is one of the factors that leads us to be more cautious on equities.\u201d    <\/p>\n<p>Ohsung Kwon, U.S. equity strategist at Bank of America Securities, expects the dollar\u2019s strength to cut between 5% and 6% of earnings for S&#038;P 500 companies, compared to a 2% hit last quarter. The S&#038;P 500\u2019s foreign exposure stands at about 30%, with the technology and materials sectors most vulnerable, BofA estimates. <\/p>\n<p>Earnings estimates have already fallen this year, as analysts account for a darkening U.S. economic outlook amid rising inflation and tightening financial conditions.      Analysts expect third quarter S&#038;P 500 earnings \u2013 which will start rolling in as the season kicks off next week \u2013 to have increased by 4.5% from a year ago. That is down from the 11.1% rise they were expecting at the start of July, according to IBES data from Refinitiv as of Sept. 30.    <\/p>\n<p>A bigger than expected earnings decline could further complicate the picture for U.S. stocks. The S&#038;P 500 is down about 21% this year, with few investors expecting the volatility to end until there are clear signs the Fed is getting the upper hand in its battle against inflation.     <\/p>\n<p>\u201cDollar strength continues to serve as a headwind for equities \u2026 and our FX strategists do not see the strong dollar going away any time soon,\u201d analysts at Morgan Stanley wrote.<\/p>\n<p>The stronger dollar has already claimed its share of victims this year. Nike, which receives more than half its revenue from outside North America, last month doubled its estimates for the currency\u2019s headwind on earnings to $4 billion, sending its shares down 13% on Sept. 30.     <\/p>\n<p>Other companies that have recently warned of the dollar\u2019s impact include IBM Corp, DuPont de Nemours and Procter &#038; Gamble Co.     <\/p>\n<p>While companies take steps to guard their profits from big exchange rate moves by using various hedging strategies, including those that employ forwards and options, they typically hedge only about 50% to 75% of their foreign exchange exposure, said John Doyle, vice president of dealing and trading at Monex USA.    To be sure, there is an upside to the greenback\u2019s strength for U.S. stocks, as companies that rely on importing goods will find their buying power increased.     <\/p>\n<p>At the same time, expectations of a rising buck make dollar-denominated assets more attractive to foreign investors by assuaging fears of a possible foreign exchange hit when they convert assets back into their home currency.    <\/p>\n<p>\u201cIt allows (foreign) investors to invest in what they think is a high growth area without worrying too much about the currency,\u201d said Colin Graham, head of multi-asset strategies at Robeco Institutional Asset Management.    <\/p>\n<p>Signs of a dollar peak, however, could push investors into currencies they expect to rebound as the dollar falls, analysts said.    That peak is unlikely to come in the near future, according to analysts polled Reuters.    <\/p>\n<p>Though the dollar index is down about 2% from its recent high, 85% of analysts polled by Reuters said the dollar\u2019s broad strength against a basket of currencies has not yet reached an inflection point.     <\/p>\n<p>Similarly, analysts at UBS Global Wealth Management believe a hawkish Fed, a comparatively strong U.S. economy and weak growth in Europe will keep the dollar elevated for the time being.    \u201cWe think it\u2019s too early to call a peak in Fed hawkishness or a top in the greenback,\u201d they wrote in a recent report.  <\/p>\n<p> (Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Josie Kao)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/analysis-dollars-gains-spell-earnings\/attachment\/an-employee-of-a-bank-counts-us-dollar-notes-at\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/tagreuters.com2022binary_LYNXMPEI9606T-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI9606T-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Saqib Iqbal Ahmed NEW YORK (Reuters) \u2013 A towering rally in the U.S. dollar is expected to hit third-quarter corporate earnings, potentially presenting another obstacle to stocks in a<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1677160","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1677160","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1677160"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1677160\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1677160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1677160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1677160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}