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3 Things to Watch in the Stock Market This Week

Last week was an eventful one for the stock market, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) both logging multiple all-time record highs. Indexes have turned solidly positive for the year as we head into the tick of second-quarter earnings season:

^DJI data by YCharts

Investors will be treated to a flood of quarterly reports that could drive stock price swings this week. Big names set to release quarterly updates include Netflix (NASDAQ: NFLX), Johnson & Johnson (NYSE: JNJ), and Chipotle (NYSE: CMG).

Monday, July 18 - Netflix's growth forecast

Following record subscriber growth in its first-quarter report, Netflix is expected to post a slowdown in Q2 membership gains on Monday. In fact, CEO Reed Hastings and his team project adding just 2.5 million subscribers to its rolls, compared to 3.3 million in the prior-year period. Pushing down growth this time around is a price hike on U.S. members and the wearing off of the initial rush of adding major new international markets. That slowdown has Wall Street pros turning bearish on the stock, helping push it lower headed into this week's report.

Image source: Netflix. 

Investors will be keen to hear how Netflix's domestic user base reacted to the price increase since it will show whether the company can easily pass on its spiking content costs to customers. Look for Hastings to also discuss upcoming major partnerships with Comcast and Disney that could keep subscriber rolls churning higher in the U.S. Meanwhile, management's projection for Q3 membership additions could be weighed down by the Olympics, but that two-week speed bump shouldn't concern long-term investors at all.

Tuesday, July 19 - Johnson & Johnson's product pipeline

Investors are optimistic about healthcare giant Johnson & Johnson's Tuesday morning report. The stock recently hit an all-time high after management boosted their 2016 outlook as Q1 adjusted organic sales spiked higher by 7%. Executives are seeing a decent rebound in the consumer products segment, soaring results in the pharmaceuticals division, and steady gains in medical devices unit .

Consensus estimates call for earnings to tick lower to $1.69 per share from $1.71 per share last year. Yet after adjusting for divestments and foreign currency exchange swings, JNJ should post solid profit growth this year. Management recently raised its 2016 forecast to as high as $6.61 per share. Product innovations are key to the company's impressive record of success, and that's why its $9 billion of annual R&D spending creates such a strong moat around its business. Thus, investors will be watching for updates on JNJ's pharmaceutical pipeline and news about recently released products.

Thursday, July 21 - Chipotle's customer traffic

Chipotle's shares are down nearly 50% from its mid-2015 high. That kind of collapse can be expected when a company suffers its first-ever quarterly sales decline followed quickly by its first-ever net loss as a public company.

Image source: Chipotle.

The restaurant chain has been working hard to win its customers back after last year's food-safety scare. Besides a major sanitation overhaul, those rebound initiatives have included free burritos, new marketing campaigns, and a customer loyalty program.

These moves aren't expected to have turned the tide in Q2, though. Consensus estimates peg sales falling 12% as earnings plunge by 80% to $0.93 per share. Chipotle executives seem confident that the struggles haven't damaged the long-run economics of this business, which is why they've ramped up stock buybacks to an unprecedented level. Investors who agree with that reading might consider buying this heavily discounted stock – but they should be prepared for a long, and likely volatile recovery period.

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Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill, Netflix, and Walt Disney. The Motley Fool owns shares of and recommends Chipotle Mexican Grill, Johnson and Johnson, Netflix, 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.