Stocks dead in the water due to dollar?

Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

Are stocks dead in the water thanks to the dollar rise?

Talk about an anemic rally. First, it was the decline in energy prices that hurt earnings.

Now, the dollar surge is adding another dimension to the decline in earnings.

I noted Tuesday that earnings growth for the first and second quarter have already gone negative, and that full year earnings growth sits at a measly 1.1 percent:

S&P 500 earnings estimates:

Q1: Down 2.6%

Q2: Down 1.8%

2015: Up 1.1%

Source: S&P Capital IQ

The concern is that if the dollar keeps rallying, we are not going to see any earnings growth at all this year.

And yes, while many companies do not break out currency impact, or even the contribution to revenues and earnings by geographic region, enough do to indicate that a significant dollar rise could knock several percentage points off earnings and revenues.

Here are a few examples:

1) Campbell Soup recently gave 2015 sales guidance to -1 to +1 percent gain in sales, which included an estimated 2-point negative impact from currency translation;

2) TJX said that negative currency impact would reduce 2015 earnings by four percent.

3) Home Depot said 2105 earnings estimates of $5.11 to $5.17 a share was reduced by 6 cents a share due to currency impact.

4) Deere said 2015 sales would be decreased about 3 percent due to currency impact.

I could go on, but you get the point: there is a fairly consistent narrative that currency impact is reducing 2015 earnings and/or revenues by anywhere from one to four percent.

And this guidance was given several weeks ago: the Dollar Index is up almost 5 percent just this month!

Those numbers I cite above are going to get much worse if that sticks, or the dollar keeps rising!

That may make the market dead money in the short term.

Bottom line: the more confident you have that the dollar will keep going up, the less confident you will be on earnings growth.