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Strong Dollar Hinders Export

The U.S. trade deficit soared to a two-year high of $46.6 billion in December, mostly because of temporary oil-related shifts. Yet a stronger dollar and weak global growth likely played a role in curbing American exports. The nation’s trade gap jumped 17.1% from revised $39.8 billion in November, as oil imports rose and crude exports declined, the Commerce Department said Thursday. In December, overall exports slipped 0.8% to a seasonally adjusted $194.9 billion. Imports increased 2.2% to $241.4 billion. Economists surveyed by MarketWatch had forecast a total deficit of $38.7 billion. Despite the oil reversal in December, the U.S. boosted petroleum exports to a record high in 2014 and imported the least amount of crude in five years because of surging domestic energy production. Because of the much larger trade deficit, the initially reported 2.6% gain in fourth-quarter gross domestic product is unlikely to be revised higher unless other areas of the economy turn out to show stronger growth than initially estimated.

Microsoft, Procter & Gamble (PG), Hershey (HSY), Johnson & Johnson (JNJ) and Caterpillar (CAT) are just a few of several firms to warn about the negative impact that the resurgent dollar will have on their overseas operations.

That’s why many investing experts say that small-cap stocks tend to benefit the most from a strong dollar because they generally do little business abroad. But those companies also tend to be riskier.

Fortunately, there are plenty of blue chips that won’t have to worry about currency fluctuations. That’s because nearly all of their sales come from the good ole US of A.

According to figures from FactSet Research, 107 of the companies in the S&P 500 generate more than 85% of their revenue from their domestic business.