3 things to watch in the stock market this week

Stocks jumped last week, despite news that the US economy has now contracted for two consecutive quarters. no Dow Jones Industrial Average (^ DJI 0.97%) and the Standard & Poor’s 500 (^ GSPC 1.42%) It gained more than 3% on the hope that corporate earnings will see a weak fall in the second half of 2022 after rising for most of the past two years.

Hundreds of companies will be telling investors their forecasts for 2022 next week, and these announcements will collectively answer many of the questions investors have about consumer spending and broader economic growth trends. Let’s take a closer look at three of these reports, from electronic arts (EA -1.46%)And the Molson Course (Faucet 1.20%)And the ebay (ebay 0.87%).

1. EA audience size

Investors have some important questions heading into Electronic Arts’ fiscal first-quarter earnings report on Tuesday. The video game giant’s latest update contained a lot of good news. Net bookings grew at an average rate of 18%, or as fast as they did in the earlier stages of the pandemic. The steady pace of new content releases from EA in successful franchises such as Apex Legends and EA Sports has helped drive audiences into early 2022.

That success had investors frolicking as they headed to Tuesday’s report, in which revenue is expected to fall about 1% compared to the previous year’s booming results. The big question is whether the company can quickly return to growth after a slight dip in demand for digital content, just as it has Netflix Expected in mid-July.

Anyway, EA is getting stronger financially, with higher profit margins and improved cash flow to over $2 billion annually. Assuming there are no major delays in content, these gains should support strong returns for investors from here.

2. Molson Coors’ market share

Look for volatility on the Molson Coors earnings update on Tuesday morning. The alcoholic beverage giant’s stock has beaten the market this year, up more than 20% even as the S&P 500 plunged more than 15%. This gap will be tested this week.

The owner of the beer brands Coors and Miller Light announced in early May that sales had jumped by 10%, which allowed him to win market share against peers such as Anheuser-BuschAnd the Constellation brandsAnd the Boston Bear. Demand tends toward many basic beer products, but the company also succeeds in the premium field that includes brands like Topo Chico, Simply Spiked, and Molson Ultra.

Investors will want to see more gains in these arenas on Tuesday. Ideally, Molson would also maintain its bright earnings outlook, which would require a modest increase in profitability despite higher costs. If executives continue to expect higher margins this week, the stock is likely to attract more interest from investors seeking recession-resistant businesses with strong pricing power.

3. eBay Buyer’s Pool

There has been a significant shift in sentiment around the eBay business that can be traced directly back to the hangovers of its growth. After picking up in the early stages of the pandemic, organic growth has turned negative in recent quarters, and investors haven’t been happy about that.

Look for further declines in Wednesday’s earnings update. eBay executives expected organic sales to fall by as much as 9% this quarter, with losses set to decline for the rest of fiscal 2022.

Watch the buyer’s gathering for signs of an impending recovery. eBay fell 13% last quarter and 9% the previous quarter. The stock’s trajectory will likely depend on how well the market platform succeeds in slowing down and then reversing those losses over the next few quarters.

Dimitri Kalogeropoulos holds positions at Netflix. Motley Fool has and recommends positions at Constellation Brands and Netflix. The Motley Fool recommends Boston Beer, Electronic Arts, and eBay and recommends the following options: Short calls in July 2022 worth $57.50 on eBay. Motley Fool has a disclosure policy.

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