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What to Watch in the Stock Market This Week

By Demitri Kalogeropoulos – Mar 27, 2016 at 5:30PM

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The birth of a new superhero franchise, a key retailing earnings release, and the biggest economic report of the month are all on tap for investors during the next five trading days.

Stocks took a step back from their five-week rally this past week. The Dow Jones Industrial Average (^DJI 0.42%) and the S&P 500 (^GSPC 0.64%) each fell by less than 1% after having recovered all of their year-to-date losses. For 2016, the S&P is now slightly in the red, while the Dow is just barely in positive territory.

^DJI Chart

^DJI data by YCharts.

For the week ahead, Time Warner (TWX) shares could see a superhero-fueled stock-price swing. Meanwhile, investors are optimistic about lululemon athletica (LULU 0.51%) and its earnings results for the all-important holiday season. Finally, the biggest economic report of the month is set to move markets on Friday.

Monday, March 28 -- A Batman v Superman blockbuster?
With its Batman v Superman: Dawn of Justice release over the weekend, Time Warner plans to begin its rebound from a weak box-office showing last year, where it had more misses (Pan, Jupiter Ascending) than hits (San Andreas, American Sniper). The media giant's Warner Bros studios managed to kick in strong profit growth in spite of that poor theatrical output -- thanks to a few blockbuster video game releases.

Source: Time Warner.

Just as Disney has done with its Avengers franchise, Time Warner hopes to use this movie as a platform for launching less-known intellectual property onto the big screen. "More than just a clash between the two iconic superheroes, it will mark the beginning of a multiyear slate of franchise films at Warner," CEO Jeff Bewkes told investors in February. Wall Street will be combing through the weekend's box-office results on Monday, and the stock could react if the global receipts deviate much from the projected $350 million opening.

Wednesday, March 30 -- Healthy sales and profit growth for lululemon?
Yoga-apparel specialist lululemon posts its fiscal fourth-quarter results before the market opens on Wednesday, and investors are expecting good news from the retailer. In January, management raised its holiday-season outlook to $700 million of revenue and $0.80 per share of profit following a fiscal third quarter that included strong customer traffic growth (comparable-store sales rose 9%).

Source: lululemon. 

Beyond a similarly healthy sales uptick, investors will be looking for evidence that lululemon has steady pricing power. Those signs have been lacking lately, as gross margin slumped to 47% of sales last quarter from 50% in the prior year. Yet if the company managed to keep its cash registers busy without having to slash prices, then the stock could continue climbing -- shares are up 15% so far in 2016.

Friday, April 1 -- Jobs, jobs, jobs
The biggest economic release of the month, the Employment Situation Report, will hit newswires before the market opens on Friday. In the prior month, 242,000 jobs were created as the unemployment rate held steady at 4.9%. Meanwhile, the average employment gains during the past three months has been a healthy 228,000 as wages have ticked higher.

Monthly job growth. Source: Federal Reserve Economic Data.

Continued job and wage gains would suggest that the economy is on strong footing, making it more likely that the Federal Reserve will raise long-term interest rates at a measured pace this year. The Fed, in its March meeting, forecast two quarter-point raises ahead, and officials' projections peg the unemployment rate ticking down to 4.7% in 2016.

Demitrios Kalogeropoulos owns shares of Walt Disney. The Motley Fool owns shares of and recommends Lululemon Athletica, Time Warner, and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,738.51 (0.42%) $140.73
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,959.06 (0.64%) $25.14
Lululemon Athletica Stock Quote
Lululemon Athletica
$374.24 (0.51%) $1.91
Time Warner Inc. Stock Quote
Time Warner Inc.

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

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