The strong dollar has battered profits at some of America's biggest companies, and some experts say the companies aren't doing enough to counter the problem.
A rising dollar has sharply increased the price tag of US-made goods overseas, yet many large exporters do little to protect their earnings from the ravages of such exchange-rate shifts.
The problem hasn't gone unnoticed on Wall Street. Investors have shifted out of big-name companies lately and bought shares of smaller firms that are less likely to be bullied by the strong dollar.
The Dow Jones Industrial Average has lingered for more than a month below its Aug. 6 record close of 8,259.31, while the Nasdaq Composite Index of smaller companies hit record highs last week.
Eastman Kodak and Polaroid warned last week that earnings will be squeezed by the dollar's strength, adding their names to a list that includes Coca-Cola, Gillette, and Hewlett-Packard.
The shift is significant because robust earnings at multinational firms have been a pillar of the bull market since 1994.
Since Jan. 1, the dollar has risen 15 percent against the German mark and 5 percent against the Japanese yen.
This summer's currency turmoil in Southeast Asia spotlighted the danger facing the US companies. The chain reaction of devaluation of currencies of Thailand, Malaysia and Indonesia, which propelled the dollar more than 40 percent higher, has stunned the multinationals.
Many US giants do not hedge their currency risks through futures contracts (which effectively lock in an exchange rate for a future date), preferring instead to gamble that the dollar's fluctuations will go their way.
"US corporate culture does not educate its managers to the need for hedging, and that in turn exposes the companies and their stockholders to a lot of risks," says John Geraghty of North American Equity Services, a consulting firm.
"The problem seems to be that companies look at [hedging] as a form of speculation," he says. But "if a company takes a position in a particular currency and it does not hedge it, then the firm winds up speculating after all, because its exposure to unexpected currency swings is totally unprotected."
Yet some companies believe they have little to gain by hedging.
Kodak, which gets more than 50 percent of its revenues from abroad, says it stopped hedging against currency swings years ago.
"We looked at hedging over a long term horizon of eight to 10 years, and found that it was not cost effective," says Charlie Smith, a Kodak spokesman. The latest quarter may cause Kodak to rethink its decision, he says.