3 Things to Watch in the Stock Market This Week

Stocks fell last week as investors focused on geopolitical risks and the prospect for rising interest rates. Both the Dow Jones Industrial Average (^ DJI -0.68% ) and the S&P 500 (^ GSPC -0.72% ) shed nearly 2% and remain lower so far in 2022.

Earnings season continues to drive individual stock price moves, and several major announcements are on the way over the next few days. Let’s take a look at the updates on the way from Home Depot (HD -0.31% ), eBay (EBAY -0.54% )and Wayfair (W -2.07% ).

Two people working on a home improvement project.

Image source: Getty Images.

1. Home Depot’s dividend

Tuesday morning brings Home Depot’s fourth-quarter earnings report, which will be packed with important news for investors. We’ll learn how well home improvement demand held up through late December as the housing market continued expanding. For context, comparable-store sales rose 6% in the third quarter on top of the prior year’s over 20% surge.

Most investors are looking for Home Depot to announce similarly strong gains on Tuesday. Watch for the balance between pricing and customer traffic, though. Growth last quarter came entirely from higher spending as traffic fell over 5%. We’ll also get a better picture of market share trends when rival Lowe’s announces its results on Wednesday.

The big question is whether Home Depot will announce a major hike to its annual dividend payment. That boost is typically revealed in its Q4 report and, given the nearly 30% surge in earnings this past year, it could be much bigger than last year’s 10% payout increase.

EBay’s buyer growth

Investors are cautiously optimistic heading into eBay’s Wednesday earnings announcement. The e-commerce marketplace giant raised growth expectations in each of its prior two reports, most recently following 11% higher organic sales in Q3. Sure, sales volumes are slumping compared to peak results a year ago. But eBay is offsetting those drops with higher order spending and growth in its payments and advertising segments.

The company still sees lots of room for rising volumes as commerce moves online. Niches like collectable sneakers, pre-owned apparel, and luxury watches all have bright growth outlooks. But eBay will need to expand its buyer pool to keep attracting more sellers to the platform (and away from rivals like Walmart, Amazonand Shopify).

While there should be good news this week on eBay’s profitability and cash flow, it’s that buyer pool figure that will have the biggest effect on its growth rate over time.

3. Wayfair’s new outlook

Wayfair shares have slumped since late 2021, which sets the stage for a potentially big move around its Thursday morning earnings announcement.

Growth will not be pretty. Like eBay, Wayfair is seeing its volumes take a step back after nearly two years of soaring growth. Most investors are expecting sales to drop about 11% for Q4 as solid profits a year ago give way to net losses in late 2021. Shoppers are directing spending toward areas like travel and restaurants following several years of prioritizing home furnishings.

Wayfair’s business is still much bigger than it was in 2019. And CEO Niraj Shah and his team still believe they can reasonably target over $ 100 billion in annual sales over the long term.

But “it will take a few more quarters” for expansion rates to get back to normal, Shah warned last quarter. The big question this week is whether a clear path is emerging for that stabilization sometime in 2022.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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