Stocks Still Doing Well Despite Challenges

Analysts are not expecting great things from upcoming earnings reports, but there are still some stocks that are doing well despite the challenges.

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As earnings season kicks off this week, analysts at Goldman Sachs are recommending that investors buy stocks with a high percentage of sales from the United States. They believe that this will help protect against the negative consequences of the dollar's historic rally this year. While the strong dollar is good news for Americans traveling abroad, it will spell trouble for companies doing business in hard-hit countries. Goldman Sachs is urging investors to be cautious in these volatile markets.

Analysts aren't too optimistic about upcoming earnings, but this crop of stocks is virtually immune ... [+] to one of the biggest headwinds.  getty
Analysts are predicting that upcoming earnings may not be very good. However, there is a group of stocks that are virtually immune to one of the biggest headwinds. This could be a good opportunity to invest in these companies.

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As global economic concerns grow, investors are increasingly turning to the dollar as a safe haven asset. The dollar index has surged to a 20-year high, climbing more than 21% year over year. Against the dollar, the euro has tumbled nearly 20% over the past year, while the yen has collapsed 25%. According to Morgan Stanley, these rallies typically coincide with major financial stress in markets, a recession, or both.

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As the second quarter earnings season kicks off this week, big banks are expected to report strong numbers. However, the strong dollar is adding to headwinds for these companies. Nevertheless, Bank of America predicts that the utilities, real estate, and energy sectors are most likely to outperform this earnings season.

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With the strong dollar and growing interest rate hikes weighing on corporate profits, Morgan Stanley says it expects upcoming corporate announcements will reveal an “earnings recession” that pushes stocks down as much as 7.5% from current levels. This is obviously bad news for the stock market, and could lead to a further sell-off in the coming weeks. However, it is important to remember that stock market corrections are a normal part of the market cycle, and can actually present a buying opportunity for long-term investors.

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The strong dollar continues to be a major source of concern for economists and investors around the world. In recent months, the dollar has lost value against a number of currencies, including the euro, the yen, and the pound.

The surge in the value of the dollar is bad news for stocks, as history shows that markets will not recover until the greenback falls. This is a major concern for investors, as the dollar is currently at its highest level in years.

The U.S. dollar's recent rally could spell trouble for the stock market in the weeks ahead, with analysts warning of potential market stress. The dollar has been on a tear in recent weeks, hitting its highest level in more than two years against a basket of major currencies.