Despite dismal economic data earlier this week, the stock market jumped on Friday as investors became more optimistic about the coronavirus outlook, amid news overnight that Gilead Sciences’ Covid-19 treatment was showing signs of success in clinical trials with patients.
The Dow Jones Industrial Average was up 3%, nearly 700 points, while the S&P 500 gained 2.7% and the Nasdaq Composite rose 1.4%.
Stocks got a boost thanks to news overnight that biotech company Gilead Sciences has made a breakthrough in its clinical trial of antiviral drug Remdesivir, which showed promising results in treating coronavirus.
The phase 3 trial, conducted at the University of Chicago, found that most patients treated with the drug had “rapid recoveries in fever and respiratory symptoms,” according to the original report from STAT News.
Adding to Wall Street’s optimism about the virus outlook was a White House press conference on Thursday night, in which President Trump outlined his plans for getting the U.S. economy back up and running.
Trump said some states that met criteria for testing and a low number of new cases would be able to reopen “literally tomorrow,” though he made it clear that the onus remains on state governors, who would be calling their own shots on when to reopen.
The market also got a boost from the news that embattled airline carrier Boeing, which saw its stock plunge by as much as 75% during the coronavirus sell-off, would resume production in the Seattle area later this month.
Gilead’s stock jumped on the news Friday, rising almost 10%, while Boeing BA stock rebounded by more than 13%. Shares of several big-name stocks led the market higher this week, despite falling slightly on Friday: Amazon AMZN and Netflix NFLX both hit new record highs, up 14% and 16%, respectively, while shares of Walmart WMT rose nearly 9%.
With Friday’s rally sending stocks higher, the S&P 500 notched its first back-to-back weekly gains since early February. The index rose over 2% this week, while the Nasdaq NDAQ gained over 5% and the Dow is up around 1%.
“Markets are responding to an outlook that is a far cry from the doomsday scenario projected in the latter days of March and early days of April,” says Peter Essele, head of portfolio management for Commonwealth Financial Network. “We’ve moved from depression to recession, with a glimmer of light at the end of the tunnel.”
“While there has never been any doubt that the U.S. economy would come back online at some point, these three events, taken together, raised optimism (although doesn’t guarantee) that the comeback will be sooner rather than later,” according to a note from Bespoke Investment Group.
What to watch for
“The true litmus test over the next month will be whether payroll cuts have spilled over into additional sectors of the economy beyond leisure and hospitality,” predicts Essele. “If that ends up being the case, it’s quite possible that markets will retest lows, as the economy will require more than a simple shot of adrenaline to put things back on course.”
I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at firstname.lastname@example.org
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