The appreciating U.S. dollar is taking its toll on larger companies’ revenue with significant overseas exposure. On the other hand, mid- and small-cap exchange traded funds track companies that expand with the growing U.S. economy.

After companies like Procter & Gamble (NYSE: PG) and Pfizer (NYSE: PFE) announced disappointing earnings results due the stronger greenback and its effect on overseas sales, the markets pulled back, but the slide in mid- and small-cap ETFs was less pronounced than large-caps.

On Tuesday,  the iShares Russell 2000 ETF (NYSEArca: IWM) dipped 0.2%, Vanguard Small Cap ETF (NYSEArca: VB) was down 0.3% and WisdomTree SmallCap Dividend Fund (NYSEArca: DES) was 0.3% lower. [Smart-Beta, Small-Cap ETFs Could Outperform]

Meanwhile, the iShares Core S&P Mid-Cap ETF (NYSEArca: IJH) fell 0.5%, SPDR S&P MidCap 400 ETF (NYSEArca: MDY) decreased 0.5% and Vanguard Mid-Cap ETF (NYSEArca: VO) declined 0.4% on Tuesday. [An ETF to Capture Middle-Capitalization Companies]

In contrast, the SPDR S&P 500 ETF (NYSEArca: SPY) retreated 0.9%.

On Tuesday, P&G’s Chief Executive Officer A.G. Lafley argued that the “unprecedented” foreign-exchange rate fluctuations diminished sales by 5 percentage points, which caused profits to miss analysts’ estimates for the quarter ended Dec. 31, reports Cecile Daurat for Bloomberg.

DuPont, Pfizer and Bristol-Myers Squibb (NYSE: BMY) also announced annual forecasts that missed predictions, partly due to the stronger USD.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.