The U.S. dollar index .DXY rose on Wednesday, continuing a recent rally that has taken it to four-year highs and contributed to an environment where fewer companies are expected to top third-quarter revenue expectations, Barclays wrote.
The index rose 0.1 percent against a basket of currencies. While it is down about 1.1 percent thus far this week, that comes after a 12-week string of advances.
"Estimates have not fully adjusted to reflect recent (foreign exchange) headwinds," Barclays said in a note after the market closed on Tuesday.
"Against a backdrop of weaker international economic conditions and a stronger U.S. dollar, we expect fewer companies to beat revenue estimates, although many should still exceed earnings per share estimates."
Revenue is expected to grow 3.9 percent in the third quarter, according to Thomson Reuters data, with profits up 6.4 percent.
The third quarter isn't expected "to be a positive quarter for forward guidance," Barclays wrote. "In fact, we expect earnings and conference calls to lead to a reduction in 2015 estimates, which remain too high in our opinion."
Barclays has a year-end target of 1,975 for the S&P 500, which represents upside of 2 percent to current levels.
Index snapshot at 1030 EDT:
* S&P 500 .SPX was down 0.02 points.
* Nasdaq Comp .IXIC was down 0.98 points, or 0.02 percent.
* Dow industrials .DJI was up 10.85 points, or 0.06 percent.
* Russell 2000 .TOY was down 2.61 points, or 0.24 percent.
* S&P MidCap .IDX was down 0.76 points, or 0.06 percent.
* S&P SmallCap .SPCY was down 1.24 points, or 0.2 percent.
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