3 Things to Watch in the Stock Market This Week

By Markets Fool.com

Stocks rose last week, buoyed by a surprisingly strong reading on the job market that suggests economic growth is firming. The Dow Jones Industrial Average(DJINDICES: ^DJI) passed 18,500 points and the S&P 500 (SNPINDEX: ^GSPC)closed a at a new high.

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Both indexes are up by more than 6% so far this year:

^SPX data by YCharts

The week ahead promises several powerhouse earnings reports for investors to watch for: Disney (NYSE: DIS), Shake Shack (NYSE: SHAK), and Macy's (NYSE: M)are all set to provide their quarterly updates.

Disney Tuesday, Aug. 9

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Disney steps up to the plate with its earnings release on Tuesday. The entertainment giant's stock is down sharply over the last twelve months as investors fret about how cord-cutting will impact Disney's media network business. Signs have been pointing to increasing pressure from subscriber losses at ESPN and in pay-TV cable packages in general: Disney posted a drop in advertising that pushed its cable network sales down last quarter.

Image source: Disney.

This stock is about more than just television, though. Disney is on pace to lead all movie studios as the country's top box office winner this year thanks to blockbusters across its Marvel, Disney Animation, Disney Pictures, and LucasFilm segments. Finding Dory opened during the quarter and should keep that epic win streak intact.

Meanwhile, investors will get important updates this week on the official launch of Disney's China resort. There are 300 million people on par with the entire U.S. population -- that live within a 4-hour drive from the Shanghai park, which is why CEO Bob Iger and his executive team are so bullish about its long-term prospects. Disney is likely to announce a spike in pre-opening expenses tied to that launch, but early attendance numbers could blow past its past park launches.

Shake Shack Wednesday, Aug. 10

Upscale burger joint Shake Shack will post its earnings results after the market closes on Wednesday. The pressure is on for the fast-casual specialist to post solid sales as growth slows in the broader industry.

Image source: Getty Images.

Recently, McDonald's (NYSE: MCD), Yum Brands (NYSE: YUM) and Chipotle (NYSE: CMG) all announced lower-than expected comparable-store sales. Three months ago Shake Shack raised its comps forecast to 5% for the full year, but industry headwinds could force it to step back from that ambitious target.

The Shack is also forecasting tacking on 16 new restaurants to its base this year and its current footprint of just 52 stores in the U.S. points to a long runway for growth before saturating the market.

However, competition isn't letting up. Chipotle became just the latest company seeking to target the better burger niche by announcing plans to launch its Tasty Made burger concept beginning later this year. Shake Shack's strong customer traffic demonstrates it has an approach that resonates with customers. Rivals won't give it free run on the upscale burger market, though.

Macy's Thursday, Aug. 11

It isn't easy being in the apparel and accessories business these days, and Macy's knows that as well as anyone. The department store chain's CEO described the current selling environment as bleak in early May when he said, "We are seeing continued weakness in consumer spending levels for apparel and related categories."

Macy's at the time lowered its full-year sales and profit outlook. Since then investors have seen more signs confirming weakness in the segment. Kate Spade (NYSE: KATE) last week cited falling demand for clothing and a strong U.S. dollar for powering surprisingly low Q2 sales growth.

While that suggests Macy's won't have much great news to report on Thursday, it's unlikely that the stock will suffer from as big a hit as Kate Spade did. Shares are already near 5-year lows and Macy's valuation reflects deep pessimism on the part of investors. In that context, the stock may even have a good week if the company manages to outperform low expectations.

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Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill, McDonald's, and Walt Disney. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and Walt Disney. Try any of our Foolish newsletter services free for 30 days. 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.