Procter & Gamble Stock Rises. Earnings Had a Warning for the Stock Market.

Shares in P&G advanced 1.6% in premarket trading.

“We delivered very strong results in the first quarter of fiscal year 2024, putting us on track to deliver towards the higher end of our fiscal year guidance ranges for organic sales and core EPS growth,” said Jon Moeller, the company’s chairman and CEO.

One message in the earnings report from P&G was yet another sign that consumers remain resilient, with sales up 6% from a year prior and volumes down just 1% despite the company raising prices by 7% for a second consecutive quarter.

P&G is an excellent barometer for consumer strength as it is a titan in the world of consumer goods, behind brands like Tide washing detergent, Dawn liquid soap, Head & Shoulders shampoo, Crest toothpaste, Febreze air freshener, and more.

But another message may be a broad warning for investors that companies and stock indexes like the S&P 500 may soon feel the pinch of a stronger U.S. dollar. While guidance for organic sales and earnings per share growth was held steady, P&G lowered its all-in sales forecast for fiscal 2024 to a range of 2% to 4%, from previous guidance of 3% to 4%, citing headwinds from foreign exchange.

It’s unlikely to be the last company to adjust for a stronger dollar. The greenback has strengthened remarkably since summer lows, with the
U.S. Dollar Index
—which measures the currency against a basket of six peers—up almost 7% since early July amid shifting expectations over the outlook for U.S. interest rates.

As Barron’s has cautioned, that’s bad for multinational companies, like P&G, which pack the S&P 500 index. When the dollar strengthens, corporate profits and revenue recorded in foreign currencies is weakened.

While the dollar remains some way below a two-decade high seen late last year, there may still be momentum behind the greenback that could push it higher still. And that would not be good news for P&G, or the S&P 500.

Write to Jack Denton at [email protected]