In last night’s Closer, we provided a decile breakdown of Russell 1,000 stocks’ year-to-date moves. One area in which there has been a clear distinction between winners and losers has been how exposed the companies are internationally. Given the dollar’s decline this year, stocks that generate a higher share of revenues abroad would face less headwinds from the dollar to make them more attractive, and vice versa for stocks that are more domestically focused. That has largely appeared to have played out. As shown below, the decile of stocks that have the least international revenue exposure have only risen an average of 4.5% this year whereas most other deciles have seen average gains in the mid-teens. Then there is the 10th decile of stocks that generate the highest share of revenues abroad. That group is up an average of 22.4% this year.

Again, the dollar’s changes are a key reason for the strength in these stocks with heavy international revenue exposure. As shown below, Bloomberg’s trade-weighted dollar index peaked back in the fall and has been on a one-way trip lower, erasing much of the past year’s gains in the process. Over the past few days, the dollar has rebounded, but the steep downtrend is still alive and internationally focused companies may continue to have some fuel. 

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