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3 Things to Watch in the Stock Market This Week

Demitrios Kalogeropoulos, The Motley Fool

Stocks jumped last week, buoyed by strong earnings reports that helped send the Dow Jones Industrial Average (DJINDICES: ^DJI) past 23,000 points for the first time in its history. The S&P 500 (SNPINDEX: ^GSPC) didn't have quite as big a week, but both indexes set new highs are are up significantly in 2017.

^DJI Chart

^DJI data by YCharts

A flood of third-quarter earnings reports are likely to move markets over the next few trading days. Here's a look at what investors can expect from a few of the most anticipated announcements, from McDonald's (NYSE: MCD)Amazon.com (NASDAQ: AMZN), and iRobot (NASDAQ: IRBT).  

McDonald's and customer traffic

McDonald's is one of the best-performing stocks on the Dow heading into its final earnings report of the calendar year. Investors are cheering a powerful mix of operating and financial wins that have supercharged overall returns so far in 2017. On the operating side, the fast-food titan's sales growth is at its fastest pace in years, thanks to dozens of successful initiatives ranging from menu upgrades to store-experience improvements. As for its finances, earnings are soaring as the company executes on a refranchising plan aimed at boosting profitability .

Four friends eating in a fast-food restaurant.

Image source: Getty Images.

Executives believe that the refranchising effort should push operating margin up by 10 percentage points to about 45% of sales by 2019. In the meantime, investors will be watching for evidence that the current customer traffic rebound is sustainable. After declining for years, guest counts are up by almost 2% so far in 2017. If that trend accelerates over the coming quarters, shareholders can look forward to tasty long-term returns from this leading restaurant chain.

iRobot's spending plans

iRobot shares have had a good year so far, although concerns over competitive threats recently sent the stock far below its 2017 high of over $100 per share. Investors are worried that the consumer robotics specialist's branding and intellectual property might not be enough to sustain its leading market share position as larger rivals enter the industry.

A man reclines on a couch as a robotic vacuum cleans the floor.

Image source: Getty Images.

The company's last earnings report held no hints of share losses. In fact, revenue beat management's expectations in the second quarter by rising 45%. CEO Colin Angle and his executive team raised their full-year sales and profit targets, too, as they now expect even stronger demand in key markets including the U.S. and China.

Competitive pressure appears to be forcing the company to spend more heavily on marketing, research and development, and acquisitions, though. Investors are hoping that smart but aggressive investments in these key growth initiatives help iRobot fortify its market position before rivals can mount a more effective challenge.

Amazon's holiday forecast

Online megaretailer Amazon.com will announce its earnings results on Thursday afternoon, and investors are expecting plenty of good news. In an era where most large bricks-and-mortar stores are struggling to post growth, the company is expected to see revenue rise 28% to just under $42 billion. Amazon won't generate much in the way of profits from that massive haul, though. The company's forecast calls for operating income to range from a $400 million loss to a $300 million gain, compared with $575 million of profit in the prior-year period.

Investors will be watching Amazon's prediction for the holiday-season quarter, its biggest in terms of sales and profits. Yet while that period is important to this year's results, CEO Jeff Bezos and his team are likely to focus their comments on longer-term initiatives such as the company's competitive push in the smart-speaker segment, its young network of company-owned delivery airplanes, and the growing list of features available for corporate customers of its profitable Amazon Web Services.

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Demitrios Kalogeropoulos owns shares of McDonald's. The Motley Fool owns shares of and recommends Amazon and iRobot. The Motley Fool has a disclosure policy.