FRIDAY, March 29, 2024
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U.S. stocks soar after coronavirus drug trial shows early promise against severe symptoms

U.S. stocks soar after coronavirus drug trial shows early promise against severe symptoms

Stocks flashed green around the world as investors clung to early reports that an antiviral medicine appeared to successfully treat severe symptoms for coronavirus patients.

The Dow Jones industrial average surged roughly 600 points, or 2.5%, at Friday's open. The Standard & Poor's 500 jumped 2.0 percent and Nasdaq composite climbed 1.4%. 

U.S. markets appeared headed toward their second straight week of gains, bouncing back from March lows that ended the 10-year bull market. The rally came a day after dismal economic numbers showed the United States had erased all job gains of the past decade due to the pandemic, which continues to force tens of millions of Americans to stay home and disrupt entire industries. 

Even so, President DonaldTrump on Thursday released federal guidelines for a gradual return to normal in places with minimal coronavirus cases, even as lawmakers and health officials say the nation's testing capacity falls dangerously short of a reopening.

"There is also positive sentiment being generated by the White House's plan to begin slowly rolling back lockdown measures," said Kristina Hooper, global market strategist at Invesco. "It seems clear that, as of late, stocks have chosen to look through what is expected to be a dramatic drop in earnings, and forward to a resurgence in economic activity in the not-too-distant future."

In Europe, Britain's FTSE 100 popped 2.9%, the German DAX climbed 3.45%t and the benchmark Stoxx 600 gained 2.8%. Asian stocks finished the day with Japan's Nikkei 225 up 3.15%, and Hong Kong's Hang Seng up 1.5%.

On Thursday, STAT news reported that severely ill coronavirus patients were responding well to remdesivir, a Gilead Sciences drug, at a Chicago hospital. The trial involved only 125 people and the preliminary results were not peer reviewed, but it was welcome news for investors looking for light at the end of the pandemic tunnel, and the economic recovery that will come with it. Gilead shares spiked nearly 10% Friday morning.

"Investors are looking past the economic abyss and accentuating the positives on the health care front," said Ed Yardeni, president of Yardeni Research.

Still, oil prices remain at an 18-year-low as airline travel, driving and manufacturing have slowed to a crawl. U.S. crude was selling near $18 a barrel Friday, a fraction of what oil producers need to make a profit. If prices remain depressed long term, many oil companies, suppliers and adjacent service industries will be gravely wounded, resulting in bankruptcies and potentially massive layoffs.

China said its economy contracted 6.8% during the first three months of the year amid its coronavirus shutdown. It also reported a significantly higher death toll in Wuhan, where the virus was first detected. As of April 16, 3,869 had died and 50,333 had been infected, according to a notification released by the Wuhan epidemic prevention and control center on April 17.

Last week, 5.2 million Americans filed unemployment claims, bringing the total to 22 million in the four weeks since President Trump declared a national emergency. The United States has not seen this level of job loss since the Great Depression.

On the earnings front, consumer staples bellwether Procter & Gamble reported a 10% jump in sales during the first quarter as Americans stored up everything from toilet paper to Pampers during the lockdown.

"Optimism about an effective treatment is driving prices higher," said Daniel Wiener, chairman of Adviser Investments, based in Newton, Massachusetts. "But it's still too early to get excited. We have a lot further to go before we can sound the all-clear."

 

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