As companies begin to report second-quarter earnings results, falling oil and the strengthening dollar could spell trouble for earnings season.
According to RBC Capital Markets, a 10 percent increase in the dollar equates to a 1 percent drag on S&P 500 earnings, while a 10 percent increase in oil results in a 1 percent boost.
In a Thursday RBC report, chief U.S. strategist Jonathan Golub wrote that with oil down 44 percent and the dollar up 18 percent, S&P earnings will likely see a combined drag of 6.2 percent this quarter.
A stronger dollar means more expensive U.S. exports for other countries, as well as cheaper U.S. imports compared to domestically produced products. In a Friday blog post, the New York Federal Reserve said the strengthened dollar could result in a GDP cut of more than 0.5 percent.