By Wallace Witkowski, MarketWatch

High-exposure U.K. stocks have outperformed S&P 500 recently

Shares of U.S. companies with a higher-than-average reliance on British sales could face a rude awakening should the U.K. vote to exit the European Union on Thursday.

Stocks finished the week lower (http://www.marketwatch.com/story/us-stocks-set-for-choppy-day-as-brexit-debate-is-thrown-into-limbo-2016-06-17) on so-called Brexit worries and in the wake of a June Federal Reserve policy meeting that underscored a slower approach to rate increases (http://www.marketwatch.com/story/fed-holds-rates-steady-as-more-officials-move-into-one-hike-camp-2016-06-15) given shaky economic growth. The Dow Jones Industrial Average declined 1.1% for the week, while the S&P 500 index shed 1.2%, and the Nasdaq Composite Index fell 1.9%. Both the S&P 500 and Nasdaq logged a second week of losses.

Another earnings season is less than a month off, with a few S&P 500 outliers still scheduled to report results and Nike Inc.'s(NKE) earnings the following week. With an already dismal four quarters of profit declines on the books, the possibility of the U.K. leaving the EU adds to the earnings struggles of U.S. companies. After China, international revenue across the S&P 500 is most exposed to the U.K.

The U.S. accounts for 68.8% of S&P 500 revenue, followed by China accounting for 4.9%, and then the U.K. with 2.9%, according to John Butters, senior earnings analyst at FactSet.

The most exposed sectors to the U.K. are energy, tech, and materials, according to FactSet. Those very same sectors are also expected to have the worst profit declines for the second quarter already.

Read:The Brexit vote: Everything you need to know about the referendum (http://www.marketwatch.com/story/the-brexit-vote-everything-you-need-to-know-about-the-referendum-2016-06-07)

On a company level, 30 firms in the S&P 500 derive 10% or more of their revenue from the U.K., according to FactSet data.

The top 10 companies most exposed to the U.K. are Newmont Mining Corp.(NEM), Molson Coors Brewing Co.(TAP), PPL Corp.(PPL), Willis Towers Watson PLC (WLTW), Invesco Ltd., BlackRock Inc.(BLK), Apache Corp.(APA), LKQ Corp.(LKQ), News Corp.(NWS.AU)(NWS.AU), and CBRE Group Inc. (CBG)

If the "leave" camp prevails, stocks with high revenue exposure to the U.K. could get a rude awakening seeing they've tended to outperform the S&P 500 since the referendum vote was first announced back in February. It's only been recently that polls have shifted to a majority preference for a "leave" vote (http://www.marketwatch.com/story/brexit-fears-escalate-as-key-polls-show-lead-for-leave-voters-2016-06-16) among Britons.

Read: Here's the line in the sand for the S&P 500 if a Brexit happens (http://www.marketwatch.com/story/heres-the-line-in-the-sand-for-the-sp-500-if-a-brexit-happens-2016-06-17)

Before the Brexit vote, Federal Reserve Chairwoman Janet Yellen testifies before the Senate Banking Committee on Tuesday and before the House Financial Services panel on Wednesday.

Don't expect too much in he way of new information from Yellen, but the central banker will get a chance to try to salvage the battered credibility of the Fed, following last week's policy meeting, said Nicholas Colas, chief market strategist at Convergex, in a recent note.

"[S]he will have another chance to express her confidence in the U.S. economy and (perhaps) reinject the notion that the Federal Reserve is still really, truly, actually going to move on rates this year," said Colas.

As Colas points out, following last week's FOMC meeting, the expected probability of a rate increase before the end of the year dropped to 1 in 4 (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

Notable earnings reports

Report date     Company/ticker (FactSet EPS / revenue estimate) 
Mon., May 20    None scheduled 
Tues., May 21   FedEx Corp. US:FDX  ($3.28 / $12.77 billion) Lennar Corp. US:LEN  (87 cents / $2.6 billion) Adobe Systems Inc. US:ADBE  (68 cents / $1.4 billion) CarMax Inc. US:KMX  (93 cents / $4.22 billion) KB Home US:KBH  (14 cents / $753.4 million) 
Weds., May 22   Bed Bath & Beyond Inc. US:BBBY  (86 cents / $2.78 billion) Red Hat Inc. US:RHT  (50 cents / $562.8 million) 
Thurs., May 23  Accenture PLC US:ACN  ($1.41 / $8.29 billion) 
Fri., May 24    Finish Line Inc. US:FINL  (22 cents / $450.9 million) 
 

(END) Dow Jones Newswires

June 18, 2016 08:31 ET (12:31 GMT)