5 things to know before the stock market opens Tuesday, August 16

Here are the key news items investors need to start their trading day:

US stock markets appeared to be heading for a lukewarm open Tuesday morning after all three major indices rose on Monday. In fact, the Dow Jones Industrial Average ended above the 200-day moving average for the first time since April. Investors will also get their first taste of major retail earnings on Tuesday, as Home Depot and Walmart reported their most recent quarterly results (see below). Stocks have had a generally strong summer after a brutal first half of the year, leading some market observers to suggest a new bull market is on the way. Not so fast anyway. Markets could face a bumpy September, writes CNBC’s Patti Domm.

The retail giant posted healthy profits, surpassing sales Tuesday morning, while sticking to its second-half forecast. Previous disclosures form the basis for the results. Last month, Walmart warned that profits would be squeezed as customers, haunted by skyrocketing inflation, sought bargains on lower-margin items, such as groceries, while eschewing more profitable discretionary items such as electronics. The retailer, like others in the space, has also faced a glut of excess inventory as customers changed their behavior. Earnings aren’t the only big news for Walmart this week. On Monday, the retailer announced a deal to offer the Paramount+ streaming service, home of “Paw Patrol” and “Star Trek: Strange New Worlds,” to Walmart+ subscribers.

The home improvement retailer surpassed Wall Street’s expectations for top and bottom lines. The company also stuck to its outlook for the year, even as Americans struggle with high inflation. Home Depot sales reflect the strength of higher end consumers hiring professional contractors. “Our performance reflects continued strong demand for home improvement projects,” said Ted Decker, CEO of Home Depot, in a statement released on the release of the results. Not everything was rosy, though: The company said total customer transactions fell to 467.4 million, from 481.7 million in the previous year’s quarter. Rival home improvement retailer Lowe’s, which focuses more on the do-it-yourself crowd and could provide a clearer picture of the general consumer, reports earnings Wednesday morning.

The housing market continues to take strange turns. Homebuilders’ sentiment fell into negative territory this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Aside from a brief moment in the early days of the Covid pandemic, it’s the first time since 2014, CNBC’s Diana Olick reports. “Tightening Federal Reserve monetary policy and continued high construction costs have led to a recession in the housing market,” said Robert Dietz, chief economist for the NAHB. Mortgage rates have fallen from recent highs, but are still almost double what they were at the start of the year. House prices are also still rising and supply remains tight.

“Top Gun: Maverick” can’t keep printing money forever. We are officially in the doldrums of the summer checkout season. August and September have traditionally been quite weak months for big new releases, but this year has been especially soft as studios, disrupted by the Covid pandemic, simply don’t have that much product to release. So two of the biggest players, Disney and Sony, are turning to some old favorites to do business. Sony’s “Spider-Man: No Way Home,” which has grossed more than $1.8 billion worldwide, is coming back in September. Disney, meanwhile, is promoting two major releases with a few reissues. Ahead of the Disney+ series, “Andor,” the studio is releasing 2016’s “Rogue One: A Star Wars Story” and releasing 2009’s “Avatar” to spark interest in the highly anticipated sequel, “Avatar: The Way of Water”, is expected in December.

– Carmen Reinicke, Melissa Repko, Jack Stebbins, Diana Olick and Sarah Whitten of CNBC contributed to this report.

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