3 Things to Watch in the Stock Market This Week

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Stocks ticked lower last week but remained near record highs, with both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) having gained over 15% so far in 2017.

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Third-quarter earnings seasons is winding down, but there are still several major retailers set to post their results over the next few days. A few of the most anticipated quarterly reports are coming from Lowe's (NYSE: LOW), GameStop (NYSE: GME) and Dollar Tree (NASDAQ: DLTR). Here's what investors will be watching in these announcements. 

Lowe's growth spike

Lowe's third-quarter results, set to publish on Tuesday morning, will likely show accelerating sales gains related to rebuilding efforts around the hurricanes, wildfires, and earthquakes that affected the U.S. and Mexico during the quarter. After all, rival Home Depot just announced its best comparable-store sales gain in years thanks to the extra homebuilding demand that these events generated.

Investors will be keeping a close eye on Lowe's comparable-store sales gain as it compares to Home Depot's, which accelerated to a 7.9% pace from 6.3% in the second quarter. Lowe's has been trailing the market leader on this core metric for years, but management recently launched an initiative aimed at closing that growth gap.

We'll know whether that plan is working if Lowe's reports a significant uptick in customer traffic, which trended slightly lower through the first half of the year, compared to Home Depot's 2% increase.

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GameStop's holiday forecast

GameStop bears have been piling on to the company lately, sending shares down over 20% since its last quarterly report. That announcement had a mix of good and bad news for investors. On the bright side, sales growth held steady and remained in positive territory thanks to strong demand for new gaming consoles. However, the retailer endured shrinking revenue in its core video game software segment, which pulled profitability down.

CEO Paul Raines and his executive team have predicted that major video game software and hardware releases in the final two quarters of the year should push the segment back into positive territory so that overall comps are roughly flat compared to last year's 11% slump. We'll find out on Tuesday whether that forecast is holding up. It's clear by the stock's decline, and its current massive 9% dividend yield, that Wall Street is betting on a significant growth downgrade coming from GameStop this week.

Dollar Tree's customer traffic

Discount retailer Dollar Tree is on a roll heading into its third-quarter report on Tuesday. Sales and profit margins are both up over the first six months of the year as the company continues to extract value from its recent Family Dollar acquisition.

In its last quarterly report, Dollar Tree lifted both its top- and bottom-line targets, and now sees sales rising to as high as $22.28 billion while earnings improve to between $4.44 and $4.60 per share. Comps should rise by between 1% and 3%, executives said.

Dollar Tree is likely to hit those forecasts as long as it continues to achieve both higher customer traffic and increased spending per visit. These trends have combined to push gross profit up to 31% of sales from 30% over the first six months of the year, allowing the company to buck the negative trend that's leading to stagnant earnings across most of the retailing industry.

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Demitrios Kalogeropoulos owns shares of GameStop and Home Depot. The Motley Fool owns shares of GameStop and has the following options: short January 2018 $170 calls on Home Depot and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Home Depot and Lowe's. The Motley Fool has a disclosure policy.