3 Things to Watch in the Stock Market This Week

Stocks dropped last week, as both the Dow Jones Industrial Average (^DJI -2.82% ) and the S&P 500 ( ^GSPC -2.77% ) fell more than 1.5%. Investors didn’t like what they saw at the start of earnings season, but the main flood of reports is still to come.

The pace of announcements kicks into high gear in the week ahead, and below we’ll look at a few highlights from the long list of reports on the way. Manzana ( AAPL -2.78% ), McDonald’s (MCD -1.99% )and amazon ( AMZN -2.66% ) are among the most anticipated earnings reports to watch this week.

Smiling person looking at smartphone.

Image source: Getty Images.

1. Cash flow at Apple

Apple accounts for a large proportion of the annual earnings of the S&P 500, which explains why Wall Street pays close attention to its earnings release days. Its Thursday afternoon report is expected to show solid sales growth, although at a weaker clip than investors saw in the previous quarter when revenue jumped 11%.

Apple is benefiting from strong consumer demand for its hardware and services products, in part thanks to popular innovations across the iPhone, Mac, and iPad lines. But the biggest questions surround its future innovations in these and other areas. Apple is reportedly working on category-defining tech in the virtual and augmented reality spaces, for example, and may be crafting a subscription model for its massive iPhone business.

CEO Tim Cook and his team likely won’t break news on these projects on Thursday, but they will update Apple’s cash return plans while commenting on the health of the consumer tech industry today.

2. The rebound path at McDonald’s

McDonald’s announces its latest operating results on Thursday morning, and expectations are running high for the report. The fast-food giant entered the Q1 period with solid momentum, as sales growth accelerated on a two-year basis to 11%. Executives highlighted a record jump in the US market in 2021 that helped propel the company to over $10 billion in annual income.

We’ll learn this week whether challenges like soaring costs, the war in Ukraine, and new COVID-19 lockdowns in China eroded that momentum. Watch for CEO Chris Kempczinski and his team to discuss how they’re handling price increases, too.

The company’s growth strategy relies on winning with convenient drive-thru and home delivery options. Its industry-leading profitability, meanwhile, gives it flexibility to invest aggressively in these initiatives while still paying shareholders a growing dividend each year.

3. The business segment at Amazon

The world is taking a bit of a breather on e-commerce lately, at least compared to the massive growth period in the earlier phases of the pandemic. That slowdown will be on investors’ minds when the tech giant reports earnings on Thursday afternoon.

Amazon recently announced some capital-focused moves, like a stock split and revamped stock buyback plan. Yet this week’s announcement will be more about its core growth pillars, including e-commerce demand and the digital transformation that’s convinced businesses to move more of their processes online. Look for Amazon Web Services to show impressive growth and profit metrics thanks to that shift.

Most investors who follow the stock are looking for sales to rise at an 11% clip to $116 billion. The big question is whether Amazon is expecting that a soft year-over-year expansion rate will continue for much longer, or if a reacceleration is on the way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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