Weaker dollar raises concerns about US and European corporate earnings

The US dollar's decline is negatively impacting the profitability of European companies in the Stoxx 600 index, as 60% of their sales come from abroad.

Such major firms as Germany's SAP SE, Netherlands' Heineken NV, and France's BioMerieux view a weaker dollar as a challenge to profit growth in the medium term.

Escalating trade tensions could further weigh on the dollar and potentially trigger a recession in the United States. The S&P 500 index has already dropped by 8.6% in 2025.

According to Morgan Stanley, each 5% appreciation of the euro against the dollar reduces profit growth by 1.5–2 percentage points.

Some forecasters and traders expect the dollar to weaken further, reaching $1.20 per euro from the current level of $1.14.

About 33% of S&P 500 members' revenues are generated overseas. For domestic-oriented companies, a weaker dollar increases import costs and erodes consumer purchasing power.

Strategists are revising down their stock and index return forecasts for the year. Earnings-per-share growth for the S&P 500 is now expected at 7.3%, down from 11.4% earlier this year. Barclays Plc. strategists cut their earnings growth estimates for the Stoxx 600 to -2% in April from 3% in January.