Gold and stocks rise as Wall Street remains hopeful: August 5, 2020

The Nasdaq Composite finished again at an all-time high on Wednsday, its third-straight record this week. US stocks closed higher across the board. The Dow was boosted by an 8.8% rally in Walt Disney (DIS) shares following the company’s earnings on Tuesday.

The most important decision for investors right now is to determine their view on where they think the pandemic is going, Tom Lee, managing partner and head of research at Fundstrat, told Alison Kosik on CNN Business’ digital live show Markets Now.

“We’re at a crossroads because we had a surge [in infections] in June and July that showed that maybe some states opened too early and people got a little careless,” and this got investors concerned about the future, Lee said.

Once this surge ends, investors should focus on offensive stocks rather than playing defense. This would include investments in cyclical companies, including those in the industrials, consumer discretionary and energy sectors.

That said, a lot of uncertainty still remains going into the fall, over whether schools will repopen, the onset of the annual flu season and many (but not all) students returning to their colleges. “That’s going to keep people on edge,” Lee said.

Hopefully, however, the fall will also bring us closer to a vaccine to fight the disease, he added.

The spring lockdown and on-going pandemic have shone a light on mental health. Meditation apps are booming as people are trying to keep calm during very uncertain times.

“The Covid situation has accelerated our vision for mental health,” Rich Pierson, co-founder and CEO of meditation app Headspace, told Alison Kosik on the CNN Business digital live show Markets Now.

The mental health conversation is now in every single board room, and that wasn’t the case before the pandemic, Pierson said.

“Employees are demanding that their leaders provide the right resources for them to stay happy and healthy,” he added.

Indeed, Headspace, which has some 65 million users, has grown its enterprise client base to 1,100 companies, including big players like GE (GE), Unilever (UN) and Starbucks (SBUX), Pierson said. On top of that its millions of individual users.

But in spite of its success, the company isn’t chasing an initial public offering right now.

“We feel confident that this could be a great public company at some point,” Pierson said.

Stimulus dollars from the Federal Reserve and the government have supported the economic recovery in the past several months. But more will be necessary to get the country through this crisis.

That’s why “the market is already baking in another $1.5 trillion of stimulus,” Alicia Levine, chief strategist at BNY Mellon Inevstment Management, said on the CNN Business’ digital live show Markets Now.

Congress is in the middle of negotiations for another stimulus package, with Republicans and Democrats butting heads on the details.

That said, “it’s in everyone’s interest to get this finished,” Levine said.

But the risks for the market, Levine said, are really on the healthcare front. Even though there are “a lot of shots on goal” in terms of getting a Covid-19 vaccine done, there is a chance that it doesn’t happen, and that would introduce a lot of volatility in the market.

It’s a busy week for economic data with the July jobs report waiting in the wings for Friday. But before that, we’ll get a look at weekly claims for unemployment benefits.

They don’t look promising.

Another 1.4 million claims are expected in tomorrow’s report from the Department of Labor. That’s more or less flat from last week’s data. Rising Covid-19 infections across the country have stalled the reopening of the economy and have made it harder for people to return to work. In addition, money from government’s paycheck protection program, which allowed companies to hire back workers, is running out.

First-time jobless claims fell for months, although the pace of decline slowed down in the summer months, until their reversed course in mid-July. Over the past two reports initial claims actually rose slightly week-on-week.

Continuous claims for benefits, which count people who have applied for government aid for at least two weeks in a row, are expected to be 16.7 million, slightly lower that in the last report.

These numbers account for only regular benefits, not the pandemic assistance the government rolled out in response to Covid-19.

The expectations for tomorrow’s claims are yet another reminder that economists believe the US jobs recovery has stalled.

People can’t stop swiping in quarantine. Match Group (MTCH) said in Tuesday’s earnings that Tinder usage has skyrocketed since late winter once the virus took hold in the United States.

Match owns a number of dating apps and websites, including Hinge, OKCupid and Match.com. All services experienced user growth, which led to a better-than-expected bounce in revenue for its parent company.

Shares rose 11% in early trading.

Plant-based protein maker Beyond Meat (BYND) said late Tuesday that while net revenues rose 69% to $113.3 million last quarter compared to the same period last year, its net loss ticked up to $10.2 million.

The company had to repackage and reroute products from shuttered restaurants to grocery stores, where demand was booming.

Shares slipped more than 4% in early trading.

The Dow climbed sharply around mid-morning, rallying past its peers. Stocks opened in the green today, but the Dow is now taking the lead, climbing 1.1%, or some 300 points.

The best performer in the index is Walt Disney (DIS), which is up nearly 10% following yesterday’s earnings. The Covid-19 pandemic has hit the company, particularly its parks, hard.

But its new streaming service, Disney+, was the bright spot of the earnings report, sporting more than 60 million subscribers.

America’s services sector grew for a second month in a row in July and beat economists’ expectations. But beneath the headline number, some things are still quite gloomy.

The Institute for Supply Management’s index to measure non-manufacturing activity climbed to 58.1, from 57.1 in June. Any reading over 50 means the sector is expanding.

But while business activity and new orders grew at a faster pace than in June, other parts of the index didn’t look so good.

Supplier deliveries, inventories and prices all expanded at a slower pace in July compared to the prior month.

Perhaps worse, employment in the services sector has been contracting for five months in a row – and in July, it fell at a faster pace than in the previous month.

Square (SQ), the digital payments giant, was forced to report its earnings after the bell on Tuesday, a day earlier than expected, after the results were leaked.

No matter. Square’s results were much better than forecast, and shares of the Jack Dorsey-led company not named Twitter (TWTR) soared 11% to a new all-time high. Square shares are now up nearly 145% in 2020.

Bitcoin was a big reason for Square’s success. The company said that bitcoin trading revenues from its Cash App surged 600% from a year ago to $875 million. There has been a resurgence in demand for cryptocurrencies during the coronavirus outbreak. Bitcoin prices are up nearly 60% this year and are hovering just under $12,000. Bitcoin sales accounted for nearly half of Square’s total sales of $1.92 billion.

Square’s core digital payment business is thriving as well. Along with its rival PayPal (PYPL), Square is benefiting from more consumers ditching paper money in favor of electronic transactions. The company said in the earnings release that more sellers were resuming operations following lockdowns earlier this year and that many merchants have increased their contactless commerce options.