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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jan 26, 2020 at 12:23PM

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Apple is one of several big stocks set to make moves over the next few trading days.

Stocks declined last week, with the Dow Jones Industrial Average (^DJI 0.00%) shedding over 1% as the S&P 500 (^GSPC 2.02%) inched lower by 0.9%. Both indexes remain near all-time highs and are in positive territory since the start of 2020 after having rallied almost 30% last year.

Several highly anticipated earnings reports will be announced over the next few trading days, including from giants like Apple (AAPL 2.54%), Tesla (TSLA 5.14%), and McDonald's (MCD -0.99%). Below, we'll take a look at three key trends that might send these popular stocks moving this week.

A woman listens to music on her smartphone while jogging.

Image source: Getty Images.

1. Apple's services division

Investor enthusiasm is riding high for when Apple posts its results on Tuesday afternoon. The consumer tech giant's stock jumped nearly 90% in 2019, proving that even $1 trillion companies can make huge pricing moves.

That price rally sets up a potentially volatile period ahead, with this week's results revealing iPhone demand trends over the critical holiday shopping season. Shareholders will also get important updates about the success of relatively new projects like Apple's TV streaming service and its premium headphones, the AirPods Pro. Looking ahead, investors are excited about the company's services segment likely crossing $50 billion in annual revenue this year even as the smartphone business gets a big boost from the shift to 5G data frequencies.

2. Tesla's profitability

Tesla shares have been in a dramatic rally since early September, doubling in that period to reach over $500 each. As a result, shareholders can reasonably expect some fireworks when the electric vehicle specialist reports its latest operating results on Wednesday.

There have been some good reasons for Tesla's stock price jump. The company said in early January that automobile deliveries spiked 23% in the fourth quarter, for example, thanks to solid demand for the Model 3 car. That finish ensured that Tesla landed within management's full-year delivery target.

On Wednesday, we'll find out key information about those sales, including whether they supported bottom-line profitability. But as CEO Elon Musk and his team look ahead to fiscal 2020, they'll likely highlight Tesla's attractive potential in the Chinese market and its ambitious plans to release a new crossover vehicle, the Model Y.

3. McDonald's customer traffic

McDonald's closes its fiscal 2019 on Wednesday in an event that's likely to draw unusually high investor attention. The report will be the first one for the fast-food giant under its new CEO Chris Kempczinski. Mickey D's fourth-quarter announcement is also a key test of management's efforts to fix the core U.S. business, which has been struggling with falling customer traffic levels for two years.

The company's rebound plan has involved pouring cash into modernizing and upgrading its restaurants. A major component of that remodeling has been to ready these locations to operate as delivery hubs, too. Yet last quarter's results hinted at challenges in getting U.S. consumers to embrace its delivery options, especially given all the intense competition in that selling channel.

On Wednesday, we'll learn whether McDonald's' latest marketing efforts have helped it establish the delivery business as more of a force in the fast-food industry. The latest growth trends, meanwhile, will give investors a good idea about whether to reasonably expect customer traffic to rebound this year following two straight years of modest declines.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.24 (2.54%) $3.70
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$241.63 (-0.99%) $-2.41
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$761.61 (5.14%) $37.24
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,223.42 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,088.85 (2.02%) $80.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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