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Reuters
4 days ago
- Business
- Reuters
S&P, Nasdaq end on subdued note after brief dip on latest Trump tariff rumbling
July 18 (Reuters) - The S&P 500 and Nasdaq Composite ended little changed on Friday, overcoming a brief dip triggered by a Financial Times report indicating U.S. President Donald Trump was pushing for steep new tariffs on European Union products. The FT report, which said the Trump administration was eyeing a minimum tariff of between 15% and 20% in any deal with the European bloc, sent markets lower before they partly recovered. The S&P 500 (.SPX), opens new tab lost 0.57 points, or 0.01%, to 6,296.79, and the Nasdaq Composite (.IXIC), opens new tab gained 10.01 points, or 0.05%, to 20,895.66. The Dow Jones Industrial Average (.DJI), opens new tab fell 142.30 points, or 0.32%, to 44,342.19. Both the S&P 500 and Nasdaq have been pushed to repeated record highs in recent weeks, as investors showed increased ambivalence to Trump's tariff threats, and confidence these policies may not damage the U.S. economy as severely as once feared. Still, this week was seen as a proving ground for how Trump's economic policies are filtering into the wider economy. "People are a little tired of trying to trade tariff headlines or deadlines, and people are more concerned with seeing the proof of this come to fruition through numbers," said Greg Boutle, head of U.S. equity and derivative strategy at BNP Paribas. A raft of economic data offered mixed signals, including robust retail sales, a rise in consumer inflation, and flat producer prices for June. The University of Michigan's Consumer Sentiment Index increased this month, although consumers were still worried about future price pressures. Earnings season kicked off this week, giving an opportunity to U.S. corporations to showcase how tariffs were, or were not, affecting their businesses. Industrial giant 3M (MMM.N), opens new tab fell 3.7% after the company said the impact of tariffs will mostly be felt in the second half of the year. Of the 59 S&P 500 companies to first report second-quarter earnings this season, 81.4% have topped Wall Street's earnings expectations, according to LSEG I/B/E/S data. Charles Schwab (SCHW.N), opens new tab was among the latest on Friday, advancing 2.9% after posting higher profits. Regions Financial (RF.N), opens new tab jumped 6.1% after raising its forecasts for 2025 interest income. The week has shown, though, that beating estimates is not a recipe for trading higher. American Express (AXP.N), opens new tab outpaced second-quarter profit estimates, but its shares dropped 2.3%. Netflix (NFLX.O), opens new tab fell 5.1% despite the success of "Squid Game" helping the company surpass earnings forecasts. The streaming company also lifted its annual revenue outlook. BNP's Boutle said while not all individual stocks popped from earnings, the broader market has continued to grind higher. More meaningful market gains could come, he added, should some major companies deliver blowout numbers. Cryptocurrency stocks rose after the U.S. House of Representatives passed a bill that would develop a regulatory framework for cryptocurrencies. Robinhood Markets (HOOD.O), opens new tab and Coinbase Global (COIN.O), opens new tab were up 4.1% and 2.2%, respectively. Of the S&P sectors in positive territory, utilities (.SPLRCU), opens new tab was the biggest gainer. Its 1.7% advance pushed the index to a record close. Energy (.SPNY), opens new tab led those in the red, falling 1%. It was weighed down by SLB (SLB.N), opens new tab, which dropped 3.9% after reporting lower quarterly profit and a downbeat outlook, and Exxon Mobil (XOM.N), opens new tab, which slumped 3.5% after losing a landmark legal battle over Chevron's (CVX.N), opens new tab acquisition of Hess. For the week, the S&P 500 gained 0.59%, the Nasdaq rose 1.5%, and the Dow slipped 0.07%.
CTV News
6 days ago
- Business
- CTV News
Battered dollar a boon for U.S. multinational companies
Changing a Euro banknote for US dollars at an exchange counter in Rome, Italy, on July 13, 2022. (Gregorio Borgia / AP) NEW YORK — Large U.S. multinationals should soon start showing the positive effects of the dollar's tumble in recent months, reversing the situation in the past few years when the greenback's strength hurt companies with significant foreign revenue. The Dollar Index, which measures the buck's strength against six major currencies, is down about ten per cent for the year, due to rapidly changing U.S. trade policy and worries about U.S. growth and government debt. About half of that drop happened since April 2, when U.S. President Donald Trump announced outsized import tariffs against trading partners that started a panic about investing in U.S. assets. For the April-June period, the index, which is heavily weighted toward the euro, averaged 99.74, down 6.5 per cent from the first quarter average, the largest such decline over consecutive quarters in more than 30 years. The effects of the dollar's slide are expected to start showing up in second-quarter earnings season just getting underway. While that dollar's fall reflects investor worries about the U.S. economy's strength, it can help some companies. A weaker U.S. currency makes it cheaper for multinational companies to convert foreign profits into dollars, while also boosting the competitiveness of exporters' products. 'It's an absolutely huge move,' Greg Boutle, head of U.S. equity & derivative strategy at BNP Paribas, said. 'It is going to flatter earnings a little bit this quarter and also feed its way to guidance.' The dollar's impact on overall earnings is usually small, but can grow more meaningful when the currency experiences a large swing. Every ten per cent drop in the dollar translates into a profit surprise of about two per cent, at the S&P 500 level, according to estimates from research and strategy firm Macro Hive. That would be welcomed by investors increasingly worried about the earnings impact of evolving trade and tariff policies. The second-quarter profit reporting season started this week. 'Whatever the beat, miss or forward guidance was going to be without the FX effect will obviously be a little bit better with it,' Boutle said. The dollar's weakness this year, after a seven per cent rise in 2024, which hurt corporate results last year, took many market watchers by surprise. 'Certainly a lot of companies came into the year assuming a headwind .... That's flipped. That's a positive for earnings,' Patrick Kaser, portfolio manager at Brandywine Global, said. While earnings growth is expected to decelerate from the first quarter, the weaker dollar could help to offset possible tariff effects. Analysts are forecasting second-quarter earnings growth of 5.8 per cent year-over-year compared with 13.7 per cent in the first quarter, LSEG data show. Even in the first quarter, the dollar was a drag on year-over-year S&P 500 earnings growth of about one per cent, but now could lift earnings growth by about 0.5 per cent in the second quarter, according to David Lefkowitz, head of U.S. equities at UBS Global Wealth Management. 'If the dollar stays at these levels, the boost on a year-over-year basis will get progressively larger,' Lefkowitz said, estimating the dollar could generate a lift to year-over-year S&P 500 earnings growth by about one per cent and 1.5 per cent for the third and fourth quarter respectively. Foreign exposure S&P 500 companies generate about 41 per cent of their revenue from outside the United States, according to FactSet. Companies with major exposure to the Asia-Pacific region are particularly in focus with the euro having appreciated 12 per cent against the buck while the yen is up about 6 per cent. However, not all index constituents are equally affected by the dollar's swings. The information technology sector tops the list with the most international revenue exposure, at about 55 per cent, followed by the materials and communication services sectors, at 52 per cent and 49 per cent, respectively, according to FactSet. For instance, on Tuesday, BMO Capital Markets analyst Brian Pitz lifted his second-quarter revenue growth estimate for Netflix to 17.2 per cent from 16.4 per cent, largely boosted by a weaker dollar. Netflix will report results on Thursday. Investors are divided on the impact of a weaker dollar on stock prices. Some, like UBS's Lefkowitz, believe any benefits are already priced in by Wall Street and will not significantly move markets during earnings reports, but others still anticipate a positive boost. 'A lot of buy-side investors are obviously very acutely aware of this already, but nevertheless, we do think it's not in sell-side consensus numbers,' BNP's Boutle said. 'So we just think it creates a mechanical tailwind for earnings.' Still, analysts cautioned against counting on a big lift to stock prices from earnings beats driven by the weaker dollar. Many companies, including chipmakers, which stand to benefit from a weaker dollar, are also the ones most vulnerable to a hit from tariffs, Macro Hive research analyst Viresh Kanabar said. Investors may also be preoccupied with the potential impacts companies could see from the recent passage of the sweeping tax-cut and spending bill. 'In an environment where nothing else was going on, the move in the dollar would matter,' Brandywine's Kaser said. 'With all these other things going on, I don't think the currency effect is going to be as big as in an environment that maybe is quieter from a macroeconomic and geopolitical side of things.' --- Reporting by Saqib Iqbal Ahmed; Editing by Alden Bentley and Richard Chang
Global News
6 days ago
- Business
- Global News
Why a weak U.S. dollar could help American multinational corporations
Large U.S. multinationals should soon start showing the positive effects of the dollar's tumble in recent months, reversing the situation in the past few years when the greenback's strength hurt companies with significant foreign revenue. The Dollar Index <.DXY>, which measures the buck's strength against six major currencies, is down about 10 per cent for the year, due to rapidly changing U.S. trade policy and worries about U.S. growth and government debt. About half of that drop happened since April 2, when U.S. President Donald Trump announced outsized import tariffs against trading partners that started a panic about investing in U.S. assets. For the April-June period, the index, which is heavily weighted toward the euro, averaged 99.74, down 6.5 per cent from the first quarter average, the largest such decline over consecutive quarters in more than 30 years. The effects of the dollar's slide are expected to start showing up in second-quarter earnings season just getting underway. Story continues below advertisement While that dollar's fall reflects investor worries about the U.S. economy's strength, it can help some companies. A weaker U.S. currency makes it cheaper for multinational companies to convert foreign profits into dollars, while also boosting the competitiveness of exporters' products. 'It's an absolutely huge move,' Greg Boutle, head of U.S. equity & derivative strategy at BNP Paribas, said. 'It is going to flatter earnings a little bit this quarter and also feed its way to guidance.' The dollar's impact on overall earnings is usually small, but can grow more meaningful when the currency experiences a large swing. 2:05 President Donald Trump's policies have eroded confidence in US dollar, Treasuries Every 10 per cent drop in the dollar translates into a profit surprise of about two per cent, at the S&P 500 level, according to estimates from research and strategy firm Macro Hive. Story continues below advertisement That would be welcomed by investors increasingly worried about the earnings impact of evolving trade and tariff policies. The second-quarter profit reporting season started this week. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'Whatever the beat, miss or forward guidance was going to be without the FX effect will obviously be a little bit better with it,' Boutle said. The dollar's weakness this year, after a seven per cent rise in 2024, which hurt corporate results last year, took many market watchers by surprise. 'Certainly a lot of companies came into the year assuming a headwind …. That's flipped. That's a positive for earnings,' Patrick Kaser, portfolio manager at Brandywine Global, said. While earnings growth is expected to decelerate from the first quarter, the weaker dollar could help to offset possible tariff effects. Analysts are forecasting second-quarter earnings growth of 5.8 per cent year-over-year compared with 13.7 per cent in the first quarter, LSEG data show. Even in the first quarter, the dollar was a drag on year-over-year S&P 500 earnings growth of about one per cent, but now could lift earnings growth by about 0.5 per cent in the second quarter, according to David Lefkowitz, head of U.S. equities at UBS Global Wealth Management. 'If the dollar stays at these levels, the boost on a year-over-year basis will get progressively larger,' Lefkowitz said, estimating the dollar could generate a lift to year-over-year S&P 500 earnings growth by about one per cent and 1.5 per cent for the third and fourth quarter respectively. Story continues below advertisement Foreign exposure S&P 500 companies generate about 41 per cent of their revenue from outside the United States, according to FactSet. Companies with major exposure to the Asia-Pacific region are particularly in focus with the euro having appreciated 12 per cent against the buck while the yen is up about six per cent. However, not all index constituents are equally affected by the dollar's swings. The information technology sector tops the list with the most international revenue exposure, at about 55 per cent, followed by the materials and communication services sectors, at 52 per cent and 49 per cent, respectively, according to FactSet. For instance, on Tuesday, BMO Capital Markets analyst Brian Pitz lifted his second-quarter revenue growth estimate for Netflix to 17.2 per cent from 16.4 per cent, largely boosted by a weaker dollar. Netflix will report results on Thursday. Story continues below advertisement 5:30 Canadian dollar on the rise after 2025 election Investors are divided on the impact of a weaker dollar on stock prices. Some, like UBS's Lefkowitz, believe any benefits are already priced in by Wall Street and will not significantly move markets during earnings reports, but others still anticipate a positive boost. 'A lot of buy-side investors are obviously very acutely aware of this already, but nevertheless, we do think it's not in sell-side consensus numbers,' BNP's Boutle said. 'So we just think it creates a mechanical tailwind for earnings.' Still, analysts cautioned against counting on a big lift to stock prices from earnings beats driven by the weaker dollar. Many companies, including chipmakers, which stand to benefit from a weaker dollar, are also the ones most vulnerable to a hit from tariffs, Macro Hive research analyst Viresh Kanabar said. Story continues below advertisement Investors may also be preoccupied with the potential impacts companies could see from the recent passage of the sweeping tax-cut and spending bill. 'In an environment where nothing else was going on, the move in the dollar would matter,' Brandywine's Kaser said. 'With all these other things going on, I don't think the currency effect is going to be as big as in an environment that maybe is quieter from a macroeconomic and geopolitical side of things.' —Reporting by Saqib Iqbal Ahmed; Editing by Alden Bentley and Richard Chang
CTV News
6 days ago
- Business
- CTV News
Battered U.S. dollar a boon for multinational companies
An employee shows U.S. dollar bills at a money changer in Jakarta, Indonesia, Wednesday, July 16, 2025. (AP Photo/Tatan Syuflana) NEW YORK - Large U.S. multinationals should soon start showing the positive effects of the dollar's tumble in recent months, reversing the situation in the past few years when the greenback's strength hurt companies with significant foreign revenue. The Dollar Index, which measures the buck's strength against six major currencies, is down about 10% for the year, due to rapidly changing U.S. trade policy and worries about U.S. growth and government debt. About half of that drop happened since April 2, when U.S. President Donald Trump announced outsized import tariffs against trading partners that started a panic about investing in U.S. assets. For the April-June period, the index, which is heavily weighted toward the euro, averaged 99.74, down 6.5% from the first quarter average, the largest such decline over consecutive quarters in more than 30 years. The effects of the dollar's slide are expected to start showing up in second-quarter earnings season just getting underway. While that dollar's fall reflects investor worries about the U.S. economy's strength, it can help some companies. A weaker U.S. currency makes it cheaper for multinational companies to convert foreign profits into dollars, while also boosting the competitiveness of exporters' products. 'It's an absolutely huge move,' Greg Boutle, head of U.S. equity & derivative strategy at BNP Paribas, said. 'It is going to flatter earnings a little bit this quarter and also feed its way to guidance.' The dollar's impact on overall earnings is usually small, but can grow more meaningful when the currency experiences a large swing. Every 10% drop in the dollar translates into a profit surprise of about 2%, at the S&P 500 level, according to estimates from research and strategy firm Macro Hive. That would be welcomed by investors increasingly worried about the earnings impact of evolving trade and tariff policies. The second-quarter profit reporting season started this week. 'Whatever the beat, miss or forward guidance was going to be without the FX effect will obviously be a little bit better with it,' Boutle said. The dollar's weakness this year, after a 7% rise in 2024, which hurt corporate results last year, took many market watchers by surprise. 'Certainly a lot of companies came into the year assuming a headwind .... That's flipped. That's a positive for earnings,' Patrick Kaser, portfolio manager at Brandywine Global, said. While earnings growth is expected to decelerate from the first quarter, the weaker dollar could help to offset possible tariff effects. Analysts are forecasting second-quarter earnings growth of 5.8% year-over-year compared with 13.7% in the first quarter, LSEG data show. Even in the first quarter, the dollar was a drag on year-over-year S&P 500 earnings growth of about 1%, but now could lift earnings growth by about 0.5% in the second quarter, according to David Lefkowitz, head of U.S. equities at UBS Global Wealth Management. 'If the dollar stays at these levels, the boost on a year-over-year basis will get progressively larger,' Lefkowitz said, estimating the dollar could generate a lift to year-over-year S&P 500 earnings growth by about 1% and 1.5% for the third and fourth quarter respectively. Foreign exposure S&P 500 companies generate about 41% of their revenue from outside the United States, according to FactSet. Companies with major exposure to the Asia-Pacific region are particularly in focus with the euro having appreciated 12% against the buck while the yen is up about 6%. However, not all index constituents are equally affected by the dollar's swings. The information technology sector tops the list with the most international revenue exposure, at about 55%, followed by the materials and communication services sectors, at 52% and 49%, respectively, according to FactSet. For instance, on Tuesday, BMO Capital Markets analyst Brian Pitz lifted his second-quarter revenue growth estimate for Netflix to 17.2% from 16.4%, largely boosted by a weaker dollar. Netflix will report results on Thursday. Investors are divided on the impact of a weaker dollar on stock prices. Some, like UBS's Lefkowitz, believe any benefits are already priced in by Wall Street and will not significantly move markets during earnings reports, but others still anticipate a positive boost. 'A lot of buy-side investors are obviously very acutely aware of this already, but nevertheless, we do think it's not in sell-side consensus numbers,' BNP's Boutle said. 'So we just think it creates a mechanical tailwind for earnings.' Still, analysts cautioned against counting on a big lift to stock prices from earnings beats driven by the weaker dollar. Many companies, including chipmakers, which stand to benefit from a weaker dollar, are also the ones most vulnerable to a hit from tariffs, Macro Hive research analyst Viresh Kanabar said. Investors may also be preoccupied with the potential impacts companies could see from the recent passage of the sweeping tax-cut and spending bill. 'In an environment where nothing else was going on, the move in the dollar would matter,' Brandywine's Kaser said. 'With all these other things going on, I don't think the currency effect is going to be as big as in an environment that maybe is quieter from a macroeconomic and geopolitical side of things.' Reporting by Saqib Iqbal Ahmed; Editing by Alden Bentley and Richard Chang, Reuters
Reuters
6 days ago
- Business
- Reuters
Battered dollar a boon for U.S. multinational companies
NEW YORK, July 16 (Reuters) - Large U.S. multinationals should soon start showing the positive effects of the dollar's tumble in recent months, reversing the situation in the past few years when the greenback's strength hurt companies with significant foreign revenue. The Dollar Index (.DXY), opens new tab, which measures the buck's strength against six major currencies, is down about 10% for the year, due to rapidly changing U.S. trade policy and worries about U.S. growth and government debt. About half of that drop happened since April 2, when U.S. President Donald Trump announced outsized import tariffs against trading partners that started a panic about investing in U.S. assets. For the April-June period, the index, which is heavily weighted toward the euro, averaged 99.74, down 6.5% from the first quarter average, the largest such decline over consecutive quarters in more than 30 years. The effects of the dollar's slide are expected to start showing up in second-quarter earnings season just getting underway. While that dollar's fall reflects investor worries about the U.S. economy's strength, it can help some companies. A weaker U.S. currency makes it cheaper for multinational companies to convert foreign profits into dollars, while also boosting the competitiveness of exporters' products. "It's an absolutely huge move," Greg Boutle, head of U.S. equity & derivative strategy at BNP Paribas, said. "It is going to flatter earnings a little bit this quarter and also feed its way to guidance." The dollar's impact on overall earnings is usually small, but can grow more meaningful when the currency experiences a large swing. Every 10% drop in the dollar translates into a profit surprise of about 2%, at the S&P 500 level, according to estimates from research and strategy firm Macro Hive. That would be welcomed by investors increasingly worried about the earnings impact of evolving trade and tariff policies. The second-quarter profit reporting season started this week. "Whatever the beat, miss or forward guidance was going to be without the FX effect will obviously be a little bit better with it," Boutle said. The dollar's weakness this year, after a 7% rise in 2024, which hurt corporate results last year, took many market watchers by surprise. "Certainly a lot of companies came into the year assuming a headwind .... That's flipped. That's a positive for earnings," Patrick Kaser, portfolio manager at Brandywine Global, said. While earnings growth is expected to decelerate from the first quarter, the weaker dollar could help to offset possible tariff effects. Analysts are forecasting second-quarter earnings growth of 5.8% year-over-year compared with 13.7% in the first quarter, LSEG data show. Even in the first quarter, the dollar was a drag on year-over-year S&P 500 earnings growth of about 1%, but now could lift earnings growth by about 0.5% in the second quarter, according to David Lefkowitz, head of U.S. equities at UBS Global Wealth Management. "If the dollar stays at these levels, the boost on a year-over-year basis will get progressively larger," Lefkowitz said, estimating the dollar could generate a lift to year-over-year S&P 500 earnings growth by about 1% and 1.5% for the third and fourth quarter respectively. S&P 500 companies generate about 41% of their revenue from outside the United States, according to FactSet. Companies with major exposure to the Asia-Pacific region are particularly in focus with the euro having appreciated 12% against the buck while the yen is up about 6%. However, not all index constituents are equally affected by the dollar's swings. The information technology sector tops the list with the most international revenue exposure, at about 55%, followed by the materials and communication services sectors, at 52% and 49%, respectively, according to FactSet. For instance, on Tuesday, BMO Capital Markets analyst Brian Pitz lifted his second-quarter revenue growth estimate for Netflix (NFLX.O), opens new tab to 17.2% from 16.4%, largely boosted by a weaker dollar. Netflix will report results on Thursday. Investors are divided on the impact of a weaker dollar on stock prices. Some, like UBS's Lefkowitz, believe any benefits are already priced in by Wall Street and will not significantly move markets during earnings reports, but others still anticipate a positive boost. "A lot of buy-side investors are obviously very acutely aware of this already, but nevertheless, we do think it's not in sell-side consensus numbers," BNP's Boutle said. "So we just think it creates a mechanical tailwind for earnings." Still, analysts cautioned against counting on a big lift to stock prices from earnings beats driven by the weaker dollar. Many companies, including chipmakers, which stand to benefit from a weaker dollar, are also the ones most vulnerable to a hit from tariffs, Macro Hive research analyst Viresh Kanabar said. Investors may also be preoccupied with the potential impacts companies could see from the recent passage of the sweeping tax-cut and spending bill. "In an environment where nothing else was going on, the move in the dollar would matter," Brandywine's Kaser said. "With all these other things going on, I don't think the currency effect is going to be as big as in an environment that maybe is quieter from a macroeconomic and geopolitical side of things."
