LIVE MARKETS-Dollar deemed small tailwind to US earnings
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DOLLAR DEEMED SMALL TAILWIND TO US EARNINGS
With the U.S. dollar down sharply for the year so far and more weakness expected, David Kostin, and his equity strategist team at Goldman Sachs, expects the dollar to give a "small tailwind" to S&P 500 .SPX earnings and offset some of the pressures tied to tariffs for U.S. companies.
"An escalation in the trade conflict represents a key risk to companies with elevated foreign revenues," they write, referring the conflict that began in early April with U.S. President Donald Trump's announcement of sweeping tariffs.
But, the dollar's weakness "should help support the outperformance of stocks with higher international sales exposure over those with more US sales," the strategists said.
International sales account for 28% of S&P 500 revenues based on 10-K filings, they said, and they say the firm's macro model suggests a 10% decline in the dollar is associated with a roughly 2-3% boost to S&P 500 earnings per share.
In addition, "the Nasdaq-100 generates 45% of revenues outside of the US while the Russell 2000 derives just 20% of revenues abroad," they note.
The U.S. dollar index =USD is down about 9.7% for the year so far.
S&P 500 companies have just begun to report results on the just-ended second quarter, with 59 companies having reported as of Friday. Earnings growth for the quarter was last seen at 6.7%, according to LSEG.
(Caroline Valetkevitch)
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EARLIER ON LIVE MARKETS:
WALL STREET CLIMBS, WITH MEGACAP RESULTS THIS WEEK CLICK HERE
BENCHMARK TREASURY YIELD REMAINS RIPE FOR RANGE RESOLUTION CLICK HERE
AI'S "LOW HANGING FRUIT" IS IN EUROPE CLICK HERE
THE POUND'S COMPLICATED, DON'T SELL IT - YET CLICK HERE
Q2 SEASON SO FAR: "FINE BUT NOT FABULOUS" CLICK HERE
MINERS AND AIRLINES UPLIFT CLICK HERE
BEFORE THE BELL: TARIFFS, EARNINGS AND ECB CLICK HERE
COULD HAVE BEEN WORSE, IS ENOUGH FOR THE YEN CLICK HERE
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