How the Dow Depends on the Dollar: Exxon Mobil Corporation (XOM), McDonald’s Corporation (MCD)

2). McDonald’s Corporation (NYSE:MCD) gets almost 70% of its sales from overseas, with Europe representing its biggest geographic segment. Throughout the first half of 2012, a falling euro exacerbated the weak European economy’s effect on the company. But since then, the euro has rebounded, helping increase the dollar value of McDonald’s European earnings.

3). General Electric Company (NYSE:GE) gets about half its revenue from the U.S., but even more important is that the company has hundreds of billions of dollars’ worth of factories and industrial assets scattered around the world. With the need to pay for maintenance and upkeep in local terms, GE has had to pay attention to currency fluctuations on both the income and expense sides of its income statement.

By contrast, oil companies Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) don’t have as much currency exposure as you might expect, given their global scope. That’s largely because oil is priced in U.S. dollars, with most contracts tied to dollar-based benchmarks even when dealing with international fields. Even so, having to pay for onsite labor and services in local currencies around the world presents the companies with currency risk.

Keep your eye on the dollar
If you invest in stocks, you may see foreign exchange as a whole different market. But currency fluctuations do make a big difference in results, and so it pays to keep your eye on what’s happening with the value of the dollar.

The article How the Dow Depends on the Dollar originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Chevron, McDonald’s, and Procter & Gamble and owns shares of General Electric and McDonald’s.

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