Stocks rose significantly last week as Wall Street tried to judge the likelihood that a new stimulus package aimed at supporting the U.S. economy would be passed. Both the Dow Jones Industrial Average and the S&P 500 gained over 3%. That put the Dow back in positive territory for the year, while the S&P is up nearly 8%.
Several big-name companies are set to make headlines over the next few trading days, including Johnson & Johnson (JNJ -0.69%), Bank of America (BAC -0.13%), and Apple (AAPL 1.27%). Below, we'll look at the key trends that might send their stocks moving this week.
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Johnson & Johnson's vaccine update
Tuesday's earnings report by Johnson & Johnson should answer some important questions for investors. The healthcare titan is in the running (along with several other drugmakers) for securing orders to produce a coronavirus vaccine that might draw unprecedented demand over the next year. CEO Alex Gorsky told shareholders back in July that the company has dedicated some of its best assets toward that goal, and we will hear more details on its progress this week.
In the meantime, Wall Street is expecting to see a modest sales decline for the fiscal third quarter: an improvement over the 11% sales slump it reported for Q2. Johnson & Johnson should announce sequential sales growth overall, but particularly in the medical device segment, which shrank while consumers around the world put off elective procedures during the outbreak's initial phases. Returning stability in this division might persuade management to boost its 2020 forecast. Johnson & Johnson currently predicts roughly flat organic sales for the broader business this year.
Apple's iPhone plans
Apple is hosting an event on Tuesday morning that's expected to include an announcement of a major refresh of its powerhouse iPhone lineup. Details about the announcement are lacking, as usual, but most investors expect to see multiple new smartphone models with faster 5G download speeds. Apple might also announce new headphones to build on the early success of its AirPods line.
CEO Tim Cook may take the opportunity to update the world on demand trends for Apple's core products. The presentation will focus on the iPhone franchise, which still accounts for the majority of sales. But look for executives to also detail their progress in making the company a more services-oriented business by building up offerings like Apple TV, Apple Pay, and Apple Music.
Bank of America's economic update
Investors have low expectations heading into Bank of America's Wednesday announcement. The business suffered from historic strains in the second quarter, and those pressures likely moderated only slightly over the last few months.
CEO Brian Moynihan in mid-July called the April-through-June quarter the "most tumultuous period since the Great Depression." Collapsing economic activity triggered sharp increases in credit losses, leading to a 58% slump in pre-tax profit. Stripping out the provision for expected loan losses, pre-tax earnings still declined by 9%.
The subsequent growth rebound likely reversed much of that financial hit. Thus, look for Moynihan to highlight improvements in provisional loss predictions along with a steadily growing base of consumer deposits on Wednesday.
But investors are still concerned about the long-term effects of ultra-low interest rates and a potentially stubborn recession that lasts well into 2021. Aggressive government fiscal stimulus supported the economy through the initial phase of COVID-19 shutdowns and could help again. But unemployment remains elevated at the start of the final quarter of the year.
