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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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Exelon Corp. disclosed Wednesday that it lowered its estimate for the tax impact from the Inflation Reduction Act (IRA) that was recently signed into law to an increase of $200 million a year, starting in 2023. Earlier this month, the company had estimated that the enactment of the IRA, which implements a new 15% corporate minimum tax based on net income, would increase cash taxes for Exelon by $300 million a year. "Exelon is continuing to assess the impacts of the IRA on the financial statements and will update estimates based on guidance to be issued by the U.S. Treasury in the future," the Chicago-based utility said in a statement. The stock, which fell 0.6% in premarket trading, has rallied 13.4% year to date through Tuesday, while the SPDR Utilities Select Sector ETF has gained 8.4% and the S&P 500 s[: spx] has declined 9.7%.
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The pace of sales at U.S. retailers was unchanged last month as high inflation and rising interest rates forced many to spend cautiously.
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U.K. Inflation Jumps to 10.1%, Pushed Higher by Food The New York TimesUK Inflation Rises 10.1% in July to 40-Year High Bloomberg Markets and FinanceUK inflation exceeds 10% as bread and milk prices soar CNNShares struggle after hot UK inflation, New Zealand rate hike ReutersUK inflation hits new 40-year high of 10.1% as food and energy price surge continues CNBCView Full Coverage on Google News
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