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U.S. dollar’s dominance tends to hurt these sectors of the stock market less, says RBC

The stronger U.S. dollar is “a clear negative” for the S&P 500, but stocks in areas such as financials, utilities and real-estate investment trusts appear more insulated to the “doldrums” of the currency’s strengthening historically, according to RBC Capital Markets.

While the performance of U.S. equities tends to be broadly weak when the dollar is strengthening, selecting sectors that typically have held up better against its rise may help limit the pain in investment portfolios, said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, in a research note Monday. 

“We are seeing an uptick in complaints by corporate executives about currency headwinds rising in most sectors within the S&P 500,” said Calvasina. “But historically,” she said, trends in earnings-per-share revisions “are less sensitive to a stronger U.S. dollar in sectors such as financials,…

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