U.S. stocks climb as investors take in earnings, fresh GDP and Fed's next moves

Stocks are on pace for one of their best months in decades as the United States ramps up its coronavirus testing and states take steps to emerge from the weeks-long lockdown.

Wednesday's rally picked up steam after Gilead Sciences reported "positive data" coming from the National Institute of Allergy and Infectious Diseases' clinical trial of its investigational remdesivir treatment for covid-19. The company said "the trial has met its primary endpoint."

The trial shows that "a drug can block this virus," NIAID Director Anthony Fauci said in a news conference. Gilead called the progress "very important."

The Dow Jones industrial average closed up 532 points on the day, or about 2.2%, to 24,634. The Dow is 16% below its Feb. 12, 2020, all-time high, according to Howard Silverblatt of S&P Dow Jones Indices. American Express bounced 9%, followed by Boeing, Visa, Walt Disney and energy giants Chevron and ExxonMobil were among the Dow stalwarts.

The Standard & Poor's 500 stock index closed at 2,939, up 76 points or 2.7%. The broad market is up nearly 14% in April and on track to post its best month since October 1974. All but one of the 11 stock market sectors were positive, with energy and communications leading the way. Analysts feel the beleaguered energy sector has bottomed out from a collapse in oil prices, which sent some stocks higher.

The tech-laden Nasdaq composite spiked 307 points to finish at 8,914. The technology sector was up more than 3.6% on the day.

"The markets are rising based on near term good news from the Federal Reserve and of the promise of treatment options and a vaccine," said Michael Farr, president of Farr, Miller & Washington. "The market is beginning to see a path to the old normal economy."

European markets were up more than 2%, and Asia advanced incrementally.

In the past six weeks, the Federal Reserve has pumped $2.3 trillion into the economy, a massive amount of support that flew out the door more rapidly than most of the aid from Congress and the White House. Powell's comments will come at 2:30 p.m. Eastern time, as the central bank wraps up two days of meetings, and he is expected to give insight into the central bank's tools to fight economic deterioration going forward. Powell has made it clear he will do whatever it takes to prevent another a depression.

"Low interest rates are likely to persist for at least the next couple of years, until long after the virus' immediate threat has cleared. Lower expected policy rates will contribute to lower yields across the curve," Lauren Goodwin, economist and strategist at New York Life Investments, wrote in commentary Wednesday. "Savings rates are likely to rise, and investors will have to focus on companies that do well in low rate environments, such as large cap companies, growth stocks, or high quality balance sheets."

Alphabet's shares rose more than 9% after the company posted strong first quarter results, with a slowdown in ad sales offset by a 13% spike in revenue. 

Microsoft, Tesla and Facebook reported earnings after Wednesday's close. Microsoft beat revenue and earnings estimates and saw shares advance 1% in after-hours trading. Facebook shares jumped 8% after hours after reporting an 18% increase in earnings. Tesla shares were up after posting a small profit.

Boeing reported a $1.7 billion loss in the first quarter and said it would slash its 150,000-member workforce by 10%. The global halt in air travel is compounding the plane-maker's steep losses tied to the 737 Max crisis, which alone has cost the company $5 billion, it reported Wednesday.

The commercial jetliner has been grounded for more than a year after flawed flight control systems played a role in two deadly crashes that killed 346 people. The federal government launched criminal and civil investigations following the crashes, including an investigation into whether Boeing misled airlines about the training needed to fly the Max.

U.S. gross domestic product contracted 4.8% in the first quarter, the Commerce Department reported Wednesday. The decline is the biggest since the 2008 financial crisis, but the worst is still to come, as first the full impact of the pandemic had not manifested in the first quarter. Economists are predicting a contraction of as much as 35% in the second quarter.

Oil prices recovered on optimism toward a reopening and on fresh data from the American Petroleum Institute showing that crude storage was not filling as quickly as feared. West Texas Intermediate, the U.S. oil benchmark, was up more than 23% to trade at $15.23 a barrel. Brent crude, the international oil benchmark, climbed more than 10% at $22 a barrel.

Analysts stressed that despite pockets of good news, the economy is far from healing.

"The concern is that the focus on the present positives ignores the longer term economic degradation that is underway and has not yet bottomed, much less begun a recovery," Farr said. "A 10-year treasury note yielding 0.6% and $16 per barrel oil are not the touchstones of an economic expansion."