By Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- Investors will start finding out
if a stronger U.S. dollar really dents quarterly results this week
as earnings season ramps up with the financial sector providing the
bulk of reports and a few key players in tech posting results.
Stocks are coming off another rough week with the Dow Jones
Industrial Average (DJI) off 2%, the S&P 500 Index (SPX) down
3%, and the Nasdaq Composite Index (RIXF) sliding 4%.
In a recent report, Goldman Sachs said it expects S&P 500
companies dependent on foreign sales to turn in disappointing
revenue for the third quarter because of weaker macro data and a
stronger dollar.
"We believe domestic-facing stocks will be less likely to miss
estimates relative to those with Western Europe revenue exposure,"
Goldman Sachs noted.
Stocks with the highest foreign exposure have taken a turn for
the worse lately after a good run since 2012, said Bank of America
Merrill Lynch strategist Savita Subramanian, offering a similar
assessment for companies dependent on foreign sales.
"The top 50 stocks in the S&P 500 by foreign exposure fell
over 5% last quarter, making this the worst-performing factor that
we track," Subramanian said. "Estimate revisions for this segment
have deteriorated over the past two months, suggesting a lower bar
to beat this earnings season."
The U.S. Dollar Index (DXY), which tracks the dollar against a
basket of six major currencies, rose nearly 8% over the third
quarter.
Financial earnings reports dominate this week with nearly 50% of
the weighting on the S&P 500 reporting, but as Goldman points
out, that sector is relatively less reliant on non-U.S. revenue
when compared to other sectors like tech, which will also see some
big names reporting this week.
Major earnings on tap this week
Seven Dow components release quarterly earnings, and about 10%
of the S&P 500 will report this week.
In the financial sector: J.P. Morgan Chase & Co. (JPM),
Wells Fargo & Co. (WFC) , and Citigroup Inc. (C) report on
Tuesday. Bank of America Corp. (BAC) , American Express Co. (AXP) ,
and BlackRock Inc. (BLK) post results on Wednesday. On Thursday,
Goldman Sachs Group Inc. (GS) reports, with Morgan Stanley (MS) on
Friday.
Big tech names reporting include Intel Corp.(INTC) on Tuesday,
Netflix Inc.(NFLX) and eBay Inc.(EBAY) on Wednesday, and Google
Inc. (GOOG) on Thursday.
In health care-related stocks Johnson & Johnson Inc.(JNJ)
reports Tuesday, and UnitedHealth Group Inc. (UNH) reports
Thursday.
Capping the week for Dow components, General Electric Co. (GE)
reports Friday.
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