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U.S. stock indexes fall back from recent highs Wednesday as bulls hold their fire ahead of the release of the minutes of the Federal Reserve's last policy meeting later in the session while digesting July retail sales data.
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A strong dollar is a thorn in the side of U.S companies with a global footprint. Revenues earned overseas translate into fewer greenbacks here when the dollar is strengthening. And U.S. products become increasingly pricey for consumers abroad. Over the past year, the dollar is up more than 14% against a basket of foreign currencies, as measured by the U.S. Dollar Index (DXY). And if inflation stays high, more rate-hiking from the Federal Reserve to cool the economy and tame prices would likely push the dollar even higher.
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That has started to put a dent into U.S. corporate profits.
During the second quarter earnings season companies including Johnson & Johnson (JNJ), IBM (IBM), Microsoft (MSFT), Netflix (NFLX) and Salesforce.com (CRM) have trimmed their outlooks for business results because of a beefier buck. Companies in the benchmark S&P 500 index generate about 30% of their revenues outside the U.S. according to investment firm LPL Financial. "We estimate that currency took perhaps 2 to 2.5 percentage points out of S&P 500 revenue in the second quarter," says Jeff Buc
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Sales at U.S. retailers fell flat in July, but largely because of falling gas prices and fewer purchases of new cars and trucks
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The U.S. Census Bureau released July retail sales, which remained unchanged compared to June (seasonally adjusted). Monthly visits to beauty stores and spas have increased every month of 2022 compared to last year making them a top category.
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Sales of other goods rose more than expected in July, with food, building materials, electronics and other goods posting gains.
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