S&P 500 companies continued to report strong earnings this season that beat estimates.

But there's something different from the previous seasons. Earnings growth is in the single rather than double digits for the first time since the fourth quarter of 2020. That's according to FactSet, which closely monitors the performance of the S&P index, providing updates as the earnings reporting season is concluding.

"At this point in time, the percentage of S&P 500 companies beating EPS estimates is above the five-year average, but the magnitude of these positive surprises is below the five-year average," said John Butters, vice president and senior earnings analyst at FactSet."As a result, the index is reporting higher earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. However, the index is also reporting single-digit earnings growth for the first time since Q4 2020."

FactSet attributes the deceleration in the index earnings for the first quarter to a problematic comparison to unusually high earnings growth for the same time last year.

Meanwhile, FactSet noted a challenging macroeconomic environment like the rising labor and material costs. As a result, those factors have been squeezing the profit margins of index members that lack the pricing power to pass on the higher costs to their customers.

Still, more factors are at play, like the strong dollar trading at a multi-year high against major currencies. It hurts the profitability of index members with sizable international exposure. First, a stronger dollar has made these companies' products more expensive to overseas customers. In contrast, it made the products of their overseas competitors less costly to their domestic customers. The strong dollar's negative effect on U.S. corporations is reflected in the 5.9% decline in exports and a 17.7% increase in imports.

Second, a stronger dollar has an unfavorable "translation" effect on earnings, meaning that foreign currency-denominated earnings are translated into fewer dollars. For instance, companies with a large presence in the Japanese market saw a shortfall in their earnings as the dollar trades at a 20-year high against the yen.

Meanwhile, the Russia-Ukraine war has negatively affected companies with a significant presence in the two countries, either directly by forcing them to shut down operations or indirectly by reducing trade.

The deceleration in S&P index earnings comes at the wrong time for Wall Street. It coincides with rising interest rates, pushing traders and investors already on edge. Thus, with the frequent and broad sell-offs seen on Wall Street in recent weeks, investors sell off the shares in nearly every company, including those that reported strong earnings. For instance, investors sold off the shares of Microsoft and Apple last Friday, though they reported strong financial results in the previous days.

And the situation may turn worse before it turns better, as the macroeconomic environment will remain challenging for S&P 500 companies for quite some time.

The Fed is just at the beginning of its tightening cycle, meaning a solid dollar will remain a headwind for corporate earnings.

In addition, labor and material costs continue to rise. And the Russia-Ukraine war drags along without an end in sight. So that's two more headwinds for corporate earnings.