Doomed by the dollar… The US dollar is so strong that it's hurting earnings for US corporate giants that do business abroad. The USD’s value is at its highest in 20 years: even the euro was worth less than the greenback this month for the first time in decades. Global investors have gained more confidence in the dollar relative to other currencies (high interest rates are one reason).
Foreign exchange… weighs more heavily on certain industries. The appreciating dollar hits Big Tech hard, since tech giants in the S&P 500 earn 59% of their revenue abroad — twice the S&P’s overall average. We’ll see the damage when multinationals like Apple, Google, Microsoft, and Meta report this week.
The buck hasn’t stopped… Since the dollar’s expected to keep rising for months, experts predict S&P 500 companies will lose $100B in earnings this year (i.e. 5% less earnings growth). Shares of globally exposed US companies have already fallen more than twice as much as their US-centric peers this year. IBM expects a $3.5B dollar-driven dip in sales, and Apple could also take a big hit since nearly two-thirds of its sales come from outside the US.